OPEC chief: Cartel must stay together as US sanctions Iran

Virginia Carson
September 21, 2018

With Iran's crude sales falling due to the USA sanctions and countries such as Venezuela struggling to avoid outright economic collapse, it was perhaps inevitable that Mohammad Barkindo, secretary general for the Organization of the Petroleum Exporting Countries (OPEC), would tell Reuters that his cartel will keep working with other oil producers to manage global supplies in the face of demand for crude facing "headwinds".

Brent crude futures LCOc1 were down 9 cents at $78.92 per barrel 0334 GMT, after rising 1.3 percent in the previous session.

U.S. West Texas Intermediate (WTI) crude fell 32 cents, or 0.46 percent, to $68.59 per barrel.

Since spring when the Trump Administration said it would impose the sanctions, crude traders have priced in a risk premium reflecting the supply shortages that may occur when exports from Iran, the third-largest Organisation of Petroleum Exporting Countries (OPEC) producer, are cut.

Saudi Arabia, Russia and other major exporting countries are scheduled to meet Sunday in Algiers to review the oil market.

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Refineries in the United States consumed about 17.7 million barrels per day (bpd) of crude oil last week while China's refiners used about 11.8 million bpd in August, according to government data from the countries, the most among the world's countries.

"Iran is not only a founding member of OPEC, it's a very important member of this organization", OPEC Secretary-General Mohammed Sanusi Barkindo said.

The head of OPEC says the oil cartel must stick together for the good of the global economy as Iran faces renewed US sanctions.

USA crude inventories rose by 1.2 million barrels to 397.1 million in the week to September 14, according to the American Petroleum Institute (API).

Iranian crude oil exports continue to decline.

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He didn't address how the global oil industry immediately can replace Iranian crude supplies in an already-tight market.

Yesterday, Russian Energy Minister Alexander Novak said all possible scenarios for oil output could be discussed at a meeting of OPEC and non-OPEC states in Algeria this month.

Reuters previously reported Saudi Arabia wants crude to stay between $70 and $80/Bbl maximizing revenue and keeping a lid on prices until USA congressional elections.

Bloomberg reported on Tuesday, citing unnamed Saudi sources, the kingdom was now comfortable with prices above $80 per barrel, at least for the short-term.

That follows an announcement from the USA that it will impose a 10 per cent tariff on about $200 billion in Chinese goods next week.

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U.S. sanctions affecting Iran's petroleum sector will come into force from November 4.

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