Oil prices fall amid surprise growth in US crude stocks

Technical chart showing the performance of crude oil prices

US stock indexes broadly fell yesterday, weighing on oil futures, on expectations that Trump would go ahead with the new tariffs and that Beijing would retaliate.

Iran is the third-largest producer among the members of the Organization of the Petroleum Exporting Countries (OPEC).

Oil prices slipped on Tuesday morning in Asia as the USA vowed to impose 10% tariffs on a further $200 billion worth of Chinese goods on Monday, which rattled the markets.

USA oil futures surged almost 2 percent on Wednesday as they were bolstered by a fifth weekly crude inventory drawdown and strong domestic gasoline demand amid ongoing global supply concerns over US sanctions on Iran that come into force in November.

Commenting on Iran's oil supply, "we believe that the full effect of the Iranian oil sanctions has yet to be seen and we feel that the next 5-6 week anticipatory phase of the official sanctions will associate with steady speculative buying interest", Jim Ritterbusch, president of Ritterbusch and Associates, told Reuters on Monday.

Russian Energy Minister Alexander Novak said an oil price between $70 and $80 was temporary and sanctions-driven, adding the long-term price would stand around $50 a barrel.

Problems with supply are already being felt with most nations complying ahead of time with USA demands to end all exports of oil from Iran.

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The head of OPEC said Tuesday that Iran remains "a very important member" of the oil cartel, as Tehran braces for a new round of USA sanctions partially targeting its crude exports.

"When you have major producers facing supply challenges, it's of concern" for OPEC and consumers alike, he said.

At 0936 GMT, November WTI Crude Oil is trading $69.60, up $0.92 or +1.34% and December Brent Crude Oil is at $78.65, up $1.06 or +1.37%.

With Iran's crude sales falling due to the US 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".

Washington's withdrawal from the landmark Iran nuclear deal was criticised across the world.

Reuters reported on September 5 that Saudi Arabia wanted oil to stay between $70 and $80 to keep a balance between maximizing revenue and keeping a lid on prices until USA congressional elections.

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