Crude oil futures were stable to higher during mid-morning trade in Asia Tuesday, with the Brent futures contract largely unchanged on the back of stable production data from Russian Federation and the NYMEX WTI contract edging higher ahead of the release of weekly United States inventory reports. So far, the news is having a limited impact on Brent prices. Crude is up 9% since mid-August as WTI flirts with $70 per barrel.
Mohammed bin Hamad Al Rumhy, oil minister for Oman, remarked, "There is a danger that the demand will be impacted as well: people often focus on the supply side - what happens if Iran stops supplying - but what happens if China reduces its consumption?"
Japan's major oil distributors, taking heed of US demands, are expected to suspend crude imports from Iran in October and switch to other producers in the Middle East, sources with knowledge of the plans say. On top of that, sanctions are set to hit Iran on November 4.
It's unclear, however, how much the U.S.'s allies will cut back on Iranian oil imports.
Even though sanctions don't officially take effect until November, Iran is already seeing customers flee as the US imposes penalties on buyers after Trump quit a 2015 nuclear accord with the country.
Russian Federation started raising oil output in June after the the OPEC/non-OPEC coalition agreed to ease production caps in effect since 2017.
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Brent crude oil LCOc1 was up 45 cents at $78.09 a barrel by 1045 GMT.
While US sanctions are forcing many Western companies to cease trading with Tehran, two of its biggest customers have said they will continue to buy Iranian crude.
Production by the Organization of the Petroleum Exporting Countries rose 220,000 barrels per day (bpd) in August to a 2018 high of 32.79 million bpd, a Reuters survey showed.
The world's top oil buyers are discovering that U.S. sanctions on Iran will squeeze their trade flows whether they agree with America or not. The shift comes as Iran's oil exports are shrinking, with key buyers in Asia taking fewer cargoes weeks before US-imposed sanctions take full effect.
"The U.S. crude marker is leading the energy complex as a fast-approaching tropical storm triggers a spate of evacuations and production shut ins across the U.S. Gulf Coast". Meanwhile, the price of US WTI crude was 2.05% in the green at $71.23 per barrel. The market will look to other producers such as Russian Federation to fill the void, even as Nigeria's oil minister remains confident of OPEC's ability to pump more, said the Singapore-based analyst.