Turkey's TÜPRAŞ in talks with United States for Iran sanctions waiver

Virginia Carson
October 22, 2018

Crude prices fell sharply Thursday, with the USA benchmark tallying a two-day drop of more than 4% following a fourth straight weekly climb in crude inventories that has seen domestic supplies swell by a total of 22 million barrels over that period.

Brent for December delivery fell 76 cents, or 0.9%, to settle at $79.29 a barrel on the London-based ICE Futures Europe exchange.

The buildup, "amid the upward trend in USA crude oil production, could be a bearish factor for oil prices in the coming few weeks", the report said.

Futures fell 1.6% in NY.

US crude stocks gained 6.5 million barrels last week, the US Energy Information Administration said on Wednesday, the fourth straight weekly build and nearly three times what the analysts had forecast.

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Investors also turned their attention to the impending loss of Iran's crude exports after the United States re-imposes sanctions in early November. Even as the disappearance of Jamal Khashoggi kept the market on edge, President Donald Trump cautioned against putting the entire US-Saudi relationship at risk.

"Although there's tension between Saudi Arabia and the USA, the market doesn't think the Saudis are going to use their oil as a weapon", said Andy Lipow, an oil market analyst at Lipow Oil Associates in Houston.

But Turkey has been vocally opposed to the U.S. sanctions on Iran, and has said it will not cut trade ties with Tehran at the behest of other countries. "Already at $80, we are seeing emerging-market local oil prices pretty close to where we peaked a few years ago ... the race to protect consumers from further price rises from here could potentially impact demand growth sooner than would otherwise have been expected".

The US administration has been pushing its allies to cut Iranian oil imports and encouraging Saudi Arabia, other OPEC states and Russian Federation to pump more oil to meet any shortfall.

"We are engaged with the U.S. on this matter and we have shared our position with the USA at different levels", Kumar said.

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"We're meeting every single demand for barrels", Al-Falih said at the time. United States crude was down US$1.10, or 1.6 per cent, at US$68.65.

"Despite the bullish talk, Saudi Arabia is very unlikely to pick the oil market as a means for retaliation", said Norbert Ruecker, head of macro and commodity research at Julius Baer Group Ltd.in Zurich.

Saudi Arabia's role as a major oil producer is vital to U.S. efforts to ramp up economic pressure on Iran, a policy on which both Riyadh and the Trump administration are closely aligned.

While offering of oil at IRENEX is a pilot plan with its supporters and opponents, if conducted and continues it will definitely change Iran' pattern of crude oil exports and create some big potentials for expansion of the deals and some new financial instruments over this highly-valued export product.

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