Oil Prices Rally On Supply Worries

Oil Prices Rally On Supply Worries

Crude oil prices steadied Monday, weighed down by rising supply from OPEC and the US, but supported by concerns falling Iranian output will tighten markets once USA sanctions begin in November.

But global oil markets are still fairly well supplied.

The Brent crude oil - the global benchmark for oil prices - was trading at $78.01 per barrel, however, closed trading at $79.38 per barrel.

"These Iranian barrels that we're going to lose, it's really going to hurt". Japan's Fuji Oil Co. has effectively stopped buying crude from the Persian Gulf state because it's becoming hard to secure a ship to transport oil, according to a company spokesman.

Mirroring a step by China, where buyers are shifting almost all their Iranian oil imports to vessels owned by National Iranian Tanker Co (NITC), this means that Asia's two biggest oil importers are making plans to continue Iran purchases despite pressure by Washington to cut orders.

The sharp increase was linked to mounting concerns that falling Iranian output could tighten markets once US sanctions bite from November.

Crude is up 9% since mid-August as WTI flirts with $70 per barrel. He also stated that the Iranian production is already giving indications of declining.




Following Seko's comments, a spokesman for JXTG Nippon Oil & Energy, Japan's largest refiner, on Tuesday declined to comment on its loadings and imports of Iranian oil after October.

This output was helped by Libya recovering some of its production capability.

Russia, which is cooperating with OPEC along with several other non-members, kept pumping at near post-Soviet records last month as it reaped the benefits from the June deal to ease output caps.

For the first time in 3 weeks, 2 new oil rigs were added to United States oil production operations, taking the count of active oil rigs to 862. Thanks to the US Labor Day holiday, trading volumes in both US and European crude oil futures were relatively light.

China's manufacturing activity grew at the slowest pace in more than a year in August, with export orders shrinking for a fifth month, a private survey showed on Monday.

"It isn't at all clear that such type of economic headwinds will topple oil prices given ... the constant barrage of supply outages", Innes said.

As well, Showa Shell Sekiyu plans to "observe a government decision" on Iranian oil imports, said a spokesman for the crude wholesaler, but no specifics have been provided.

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