Crude oil higher as weather and Iranian supply in focus

India defies US sanctions pressure; allows state refiners to use Iran tankers

Brent crude LCOc1 futures fell 90 cents to settle at $77.27 a barrel, a 1.15 percent loss. Yesterday, WTI ended the day slightly higher while Brent crude traded at highs last seen in July earlier this year.

Mohammed bin Hamad Al Rumhy, oil minister for Oman, remarked, "There is a danger that the demand will be impacted as well: people often focus on the supply side - what happens if Iran stops supplying - but what happens if China reduces its consumption?"

His decision to re-impose sanctions on major OPEC oil producer Iran (with the restrictions due to kick in in November) could push prices even higher as Iran's contribution to global oil supply is restricted.

Tehran is offering nearly free shipping and extended credit period, arranging for tankers and insurance after Indian firms including Shipping Corp of India (SCI) were forced to halt voyages to Iran due to USA sanctions.

At the start of the week after the long USA holiday week-end, crude oil was already being underpinned by supply issues after global markets had tightened throughout the month of August.

The fall of the rial is primarily due to the country's weak economy and heavy demand for dollars among Iranians, who fear Washington's pullout from the 2015 nuclear deal between Tehran and world powers in May and reinstated USA sanctions could shrink Iran's exports.

"Exports from OPEC's third-biggest producer are falling faster than expected and worse is to come ahead of a looming second wave of US sanctions", said Stephen Brennock, analyst at London brokerage PVM Oil Associates. The high rig count has helped lift US crude production C-OUT-T-EIA by more than 30 percent since mid-2016 to 11 million bpd.

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures spiked to a new high for the year after a developing hurricane in the Gulf of Mexico caused the evacuation of two Gulf of Mexico oil platforms, disrupting supply operations.

But Trump's attack on cheap Chinese imports, and his decision to impose trade tariffs on a wide range of Chinese goods entering the USA, could damage China's economic growth and in turn lower its demand for oil.

Now add to that group Iraq, which is ready to ship more crude as soon as OPEC reaches an agreement on how members will share a collective supply boost, Alaa Al-Yasiri, acting director-general of the state-run Oil Marketing Co., said Wednesday.

While investors are now enjoying the bullish wave in oil markets, it is important to keep an eye on the bearish flashpoints hanging over markets this September. Meanwhile, the price of US WTI crude was 2.05% in the green at $71.23 per barrel.

In all, companies halted 156,907 barrels per day of oil production, according to estimates Tuesday by the U.S. Bureau of Safety and Environmental Enforcement.

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