por admin » Mar Jun 26, 2018 1:43 pm
US crude surges 3.6%, settling at $70.53, after State Dept says oil buyers must cut Iranian imports to zero
Fred Imbert | Tom DiChristopher | Patti Domm
Published 3 Hours Ago Updated 4 Mins Ago
CNBC.com
Oil prices spiked after the State Department signaled the Trump administration will take a hardline approach to cutting off Iran's oil exports.
A State Department official told reporters the administration expects oil buyers to completely cut off purchases of Iranian supplies in early November.
Oil prices were already facing upward pressure due to declining production in Venezuela and elsewhere at a time of high global demand.
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Crude jumps as US calls for Iran oil import cut
Crude prices surged by more than 3 percent on Tuesday after the U.S. State Department said it will require companies to cut all oil imports from Iran to zero by November.
The announcement exacerbates concerns about a shortage of oil at a time when Venezuela's production is in terminal decline and the market is grappling with short-term supply disruptions from Canada and Libya. Last week, OPEC and other producers including Russia agreed to raise output to prevent price spikes.
U.S. West Texas Intermediate crude futures ended Tuesday's session up $2.45 a barrel, or 3.6 percent, to $70.53, erasing earlier losses and breaking above $70 for the first time since May 25. International benchmark Brent crude was up $1.60, or 2.1 percent, at $76.33 per barrel by 2:29 pm. ET.
“The U.S. is continuing its decision to completely isolate Iran," said Gene McGillian, vice president of market research at Tradition Energy. “They’re ringing the bell even louder."
WTI intraday chart
President Donald Trump withdrew the United States from the Iran nuclear deal and restored wide-ranging sanctions against the Middle Eastern country in May, but the administration did not set a timeline for completely cutting Iranian crude imports.
Market-watchers questioned whether Trump would follow the Obama model, which called on foreign companies to reduce their purchases by 20 percent every 180 days. But the State Department clarified on Tuesday that Trump expects buyers to entirely wind down those purchases by Nov. 4.
"This isn’t unexpected. These people seem strident in what they want to do," said McGillian. "What the effect is going to be is going to be the difficult thing to measure. It could point to more demand for U.S. oil."
Iran, OPEC's third biggest producer, exports more than 2 million barrels per day.
John Kilduff, founding partner at energy hedge fund Again Capital, said Trump's decision appears calibrated to crush the Iranian regime, which has endured despite nearly 40 years of U.S. pressure.
"I’m seeing the companies, left right and center drop out from buying” Iranian oil, Kilduff said. "Total and Shell have announced they’re not buying it anymore, starting now."
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Brent trying to balance around $75 mark, says oil expert
Total CEO Patrick Pouyanne told CNBC last week that no major multinational oil and gas company can take the risk of running afoul U.S. sanctions by doing business in Iran.
Earlier in the day, oil prices pulled back sharply following a report that Saudi Arabia aims to increase its output to record levels next month.
Following an agreement among oil producers to ease output caps that have been in place for 18 months, the Saudis intend to hike production from about 10 million barrels per day to 10.8 million bpd in July, Bloomberg News reported.
OPEC has faced pressure from big oil consumers like India and China to tamp down oil prices after they recently rose to new 3½-year highs. Trump also called on OPEC to add more supply, as he faces the prospect of Americans holding him accountable for gasoline prices hovering near $3 a gallon.
Oil prices also got support on Tuesday from an outage at Canada's largest oil sands facility and concerns about Libya's crude exports due to developments in that country's ongoing conflict.
The commander of Libya's eastern political faction has transferred control of oil ports to a national company aligned with his faction, cutting off access to the supplies from the official oil authority in Tripoli, Reuters report