Published: Wed, August 08, 2018
Business | By Eloise Houston

Iran clients tweaking U.S. sanctions as $90 oil looms

Iran clients tweaking U.S. sanctions as $90 oil looms

Oil pumps are seen at sunset outside Vaudoy-en-Brie, near Paris, France April 23, 2018.

Oil prices rose on Tuesday with revived US sanctions against major crude exporter Iran expected to tighten global supply.

Meanwhile, the Trump administration went ahead this week on its vow to reimpose sanctions on Iran.

This time around, some of Iran's former creative methods in trade with Asian customers, including a barter system which avoids sanctionable transfers to the nation, may also work with the Europeans.

U.S. West Texas Intermediate (WTI) crude futures were up at 69.21 dollars a barrel.

The sanctions target Iran's us dollar purchases, metals trading, coal, industrial software and its auto sector.

The price for Brent crude oil, the global benchmark, was up 1.22 percent as of 9:15 a.m. EDT to $74.65 per barrel.

Last week, the American Petroleum Institute (API) reported a build of 5.59 million barrels of crude oil.

US sanctions on Iran's energy sector are set to be re-imposed after a 180-day "wind-down period" ending on November 4.

Many countries, including United States allies in Europe as well as China and India oppose the sanctions, but the USA government said it wants as many countries as possible to stop buying Iranian oil.

"You can not order 2 million barrels like ordering a coffee somewhere", Beat Wittmann, a partner at financial consultancy Porta Advisors, told CNBC recently.

WTI has resistance at $69.64 to $70.42 and support at $67.00 to $66.81. If we can break above the $71 level, then we are likely to reach towards the $75 handle, but there is so much noise between $70 and $71 that I think it's going to take a newsworthy event to cause that to happen.

President Donald Trump installed the first wave of sanctions Monday, targeting Iran's financial, automotive, aviation and metals sectors and threatening that the second wave will "ratchet up to yet another level" in November.

"Anyone doing business with Iran will not be doing business with the United States", he stated through his Twitter account.

This is not about bombarding the market with oil and pushing the price into the $50s, it is about preparing the market and easing the transition, he said.

Saudi Arabia's crude production dropped about 200,000 bpd last month, two sources at the Organization of the Petroleum Exporting Countries said on Friday, despite a pledge by the Saudis and top producer Russian Federation to raise output from July, with Saudi Arabia promising a "measurable" supply boost. "There is no wish from Saudi Arabia to push prices down to $50".

Traders will now look ahead to the weekly API's Weekly Statistical Bulletin today and then the US inventory data from the Energy Information Administration.

Like this: