Economy

OPEC crude basket rises to $76.02

OPEC crude basket rises to $76.02”

USA light crude pushed over $70 due to falling US crude inventories and production levels.

However, it was crude that was at the centre of market attention, with global benchmark Brent rallying to $80 per barrel following the EIA report before easing back slightly.

The sanctions on Iran have started forcing buyers to forego imports from the Islamic republic before a 4 November deadline.

But with the crisis in Venezuela showing no sign of abating, and with new USA sanctions on Iran's oil industry set to come into force on November 4, other producers may have to ramp up production even further if they want to limit the impact on the market.

"Rising challenges in some emerging and developing economies are skewing the current global economic growth risk forecast to the downside", OPEC said in the report.

"Oil prices jumped overnight as American Petroleum Institute inventory data showed a large drawdown in inventories", said William O'Loughlin, investment analyst at Australia's Rivkin Securities.

Iranian oil exports have fallen ahead of the planned introduction of U.S. sanctions on crude exports from the country that come into effect on Nov 4.

Benchmark Brent crude oil was down 65 cents a barrel at $79.09 by 1200 GMT.

The news was revealed in the IEA's monthly Oil Market Report.

Such concerns have prompted U.S. Energy Secretary Rick Perry to meet his Saudi and Russian counterparts in an effort to convince those two countries to keep oil output high in order to offset a reduction in future Iranian oil exports.

"But we are clear that these are commercial decisions-dependent on how competitively oil is priced and on the requirements of our refineries", said the official.

OPEC member states joined other countries by cutting oil production almost two years ago in an effort to push prices back up.

"As we move into 2019, a possible risk to our forecast lies in some key emerging economies, partly due to currency depreciations versus the USA dollar, raising the cost of imported energy", the agency said.

Demand for oil grew more slowly in the second quarter, particularly in Europe and Asia but also because of higher gasoline prices in the USA, the energy group said.

"This is a huge uncertainty on the market - how countries, which buy nearly 2 million barrels per day of Iranian oil, will act".

"Hence, world oil demand growth is now pegged at 1.62 Mmbpd for 2018, with total global consumption at 98.82 Mmbpd", it said. The Persian Gulf state is the third-biggest producer among Opec members.

A Chinese trade delegation is due in Washington this week to resolve the dispute, but U.S. President Donald Trump told Reuters in an interview on Monday he does not expect much progress, and that resolving the trade dispute with China will "take time".



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