Published: Mon, October 08, 2018
Money | By Armando Alvarado

Oil ends week higher ahead of Iran sactions

Oil ends week higher ahead of Iran sactions

India will buy 9 million barrels of Iranian oil in November, an industry source told Reuters, indicating that the world's third biggest oil importer would continue to buy crude from the Islamic republic despite USA sanctions coming into force on Nov. 4.

"The Iran factor is the primary near-term price driver and as such spikes will be the norm in the coming weeks", Stephen Brennock, oil analyst at PVM Oil Associates, said in a research note published Wednesday. The loss was of about 1.6%, but is expected to rise 2.5% for the week.

Brent crude was up 40 cents to $85.20 a barrel at 4:51pm (Oct 3) in London.

In its latest review last month, the Energy Regulatory Commission lowered oil prices on the backdrop of a 1.6 per cent fall in the average cost of Brent crude oil to $75.05 per barrel in August from $76.3 in July.

The World Bank has said that prices are likely to remain elevated the rest of the year and into 2019, affecting prices of basic goods in the region, which is import-reliant.

Crude futures steadied on Friday after climbing to four-year highs earlier this week, and both Brent and U.S. crude marked weekly gains ahead of USA sanctions on Iranian oil exports.

Russian Federation has "benefited tremendously" from its co-operation with OPEC over recent months, the head of Russia's investment fund said, but rising oil prices are quickly becoming a concern.

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United States bank Jefferies said there was enough oil to meet demand, but "global spare capacity is dwindling to the lowest level that we can document".

That is the longest streak of weekly cuts since October past year. "It now appears that only China and Turkey may be willing to risk USA retaliation by transacting with Iran". Other investors are betting on the continued rise in prices expecting nearly 1.2 Billion barrels of oil.

Fundamentals indicate a price in the high $70s for Brent, but the reality is seen above that, he said.

Last week, there have been rumors in the region that Saudi Arabia and the UAE-both facing a bit of a cash crunch-are actually seeking to push oil prices higher and may be coordinating efforts to miss production targets to that end.

Last week, India reduced gasoline and diesel prices to give relief to consumers against rising global crude prices caused by uncertainty over United States sanctions on Iran and OPEC's decision to raise output.

November will probably be higher, he said, potentially breaking the Saudi production record set in November 2016. However, OPEC and its allies have not committed to increasing their supply enough to reduce prices.

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