OPEC Mulls Options to Cut 2019 Oil Output to Prevent Oversupply

26 October, 2018, 04:33 | Author: Shannon Aguilar
  • Why India needs to rethink its relationship with OPEC

Still, oil markets remain nervous ahead of USA sanctions against Iran's crude exports, which kick in from November 4.

"Oil prices fell substantially.as Saudi Arabia released assurances it could supply more to the global market", Australia's Rivkin Securities said.

Crude oil and condensate exports are a significant source of revenue for Iran, with net oil export revenues estimated at $55 billion in 2017.

"I believe that our (oil) exports could continue at a suitable level and..."

Warning that such restrictions will affect the market's stability, Zanganeh said, as long as the United States targets Iran with sanctions, the volatility in the oil market will continue. The 3-month credit period offered by Iran results in lower working capital for domestic Indian refiners leading to lower borrowings and increased floating money.

Less than two weeks before USA sanctions against Iran kick in, OPEC said the oil market could shift toward a surplus and signaled it would adjust output accordingly if that were the case.

The minister indicated that the agreement starts in January 2019 and will allow oil countries to intervene to re-balance the market in any appropriate time from January onward.

Recent moves in Brent crude illustrate this contradiction.

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From Nigeria, India's crude oil imports dropped 6.36 per cent to 1.03 MT in September.

Saudi Arabia has 1.3 million bpd of spare capacity, said Falih, adding that UAE has assured they have over 200,000 bpd remaining. More than 710,000 WTI contracts changed hands on Wednesday, exceeding the 10-month daily average of about 576,000 contracts, according to Eikon.

According to the EIA's report, US crude oil refinery inputs averaged 16.3 million barrels per day during last week, which was 48,000 barrels per day less than the previous week's average.

"Saudi Arabia produces only what its customers ask for, not more".

Meanwhile, American gasoline stockpiles declined by 4.83 million barrels and distillate inventories dropped for a fifth straight week, according to EIA data.

USA commercial crude oil stockpiles rose for a fifth consecutive week last week, increasing by 6.3 million barrels to 422.79 million barrels, the Energy Information Administration said on Wednesday.

The uncertainty and volatility in the market prompted an abundance of caution from the first major oil producers to report third-quarter earnings. Platts had last month increased its forecast for cuts in Iranian oil exports from 1.4 million barrels per day to 1.7 million barrels per day once the sanctions take effect on November 5.

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