Oil holds gain near $69 amid declining USA crude inventories

Oil rallies as Iran sanctions kick in

Iran clients tweaking US sanctions as $90 oil looms

"It is a reality check that this is happening and that Iran's oil exports will be hurt when the oil sanctions hit it in November", chief commodities analyst at Commerzbank Bjarne Schieldrop said.

The tension between U.S. and China however, may partially blunt the effect of Iran sanctions on India's oil sourcing.

West Texas Intermediate (WTI) crude for September delivery traded at $68.83 a barrel on the New York Mercantile Exchange, down 18 cents, at 9:05 a.m.in Tokyo. Indian Oil is still awaiting direction from its government on Iranian crude imports, Sharma said.

The tariffs by China on US crude imports have shaken up the markets.

Net U.S. crude imports fell last week by 358,000 barrels per day.

Markets remained supported by the introduction on Tuesday of new US sanctions against Iran, which initially target Iran's purchases of USA dollars - in which oil is traded - as well as metals trading, coal, industrial software and its auto sector.

Since late 2016, the Organization of Petroleum Exporting Countries and other nations, including Russia, Kazakhstan and Mexico, have managed the oil market, giving birth to a group popularly known as OPEC+.

The mounting trade tension has raised concerns that global economic growth will slow, lowering demand for crude oil in the process.

However, for the first seven months of the year, China imported some 8.98 million barrels per day (bpd) of crude oil, up 5.6 percent from a year earlier.

Brent for October settlement traded at $74.53 a barrel on the London-based ICE Futures Europe exchange, down 12 cents.

China is the biggest and the most valued customer for Iran's oil and imports more than 650,000 barrels of oil per day from Iran. In addition to crude oil and liquified natural gas, other listed products include diesel, coal, chemicals, cars, steel products and medical equipment. That compares to its previous year's spot purchases of 6.6 million barrels from the shale producer.

"The ability of gasoline to hang in there despite strong demand weighed on the market", said John Kilduff, a partner at Again Capital Management in NY.

"The market continues to price in geopolitical risk from the reimposition of sanctions by the USA on Iran", said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.

Though China could indeed see oil demand growth slow in coming months, in part due to the ongoing trade row with the US, in the mid to long term China's oil consumption thus its reliance on foreign oil will continue to grow. Analysts polled by Reuters had forecast a 1.7 million-barrel draw in gasoline stocks USOILG=ECI.

To recap this week's events, on Tuesday, the US renewed sanctions against Iran that are expected to eventually remove about 1 million barrels per day of crude oil from the market.

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