U.S. Warns Iranian Oil Tankers May Be Courting 'Environmental Disaster'

Sean Reid
November 9, 2018

Oil prices fell to multi-month lows on Friday as global supply increased and investors anxious about the impact on fuel demand from of lower economic growth and trade disputes.

China's crude imports rose 32 percent in October compared with a year earlier to 9.61 million barrels per day (bpd), customs data showed.

West Texas Intermediate for December delivery traded 30 cents lower at US$60.37 a barrel on the New York Mercantile Exchange at 10.42am in Singapore.

The Financial Times on Friday reported more crude oil could also be coming from Iraq, with a deal close between its federal government and the Kurdistan Regional Government to restart exports from the disputed territory of Kirkuk.

The United States on Monday announced waivers for several nations - including big consumers China, India and South Korea - so that they could continue to temporarily buy Iranian crude oil.


USA crude futures lost 50 cents or 0.8% to settle at $US61.71 a barrel, the lowest since the middle of March.

Waivers granted to the sanctions intensify the market's perception that sanctions may not limit crude supply as much as initially expected.

On Wednesday, Washington warned global shipping and insurance industries not to allow Iranian oil tankers into their territorial waters or ports, saying such access may run afoul the reimposed sanctions, in addition to increasing the possibility of catastrophic economic and environmental damage if any accidents occur.

The nuclear program-related sanctions aimed at preventing Iran, a country that in April was producing 2.8 million barrels per day, to continue its exports.

Bernstein Energy expects "Iranian exports will average 1.4-million to 1.5-million barrels a day during the exemption period", down from a peak of nearly 3-million barrels a day in mid-2018.


"OPEC and Russian Federation may use cuts to support prices at $70 a barrel", said Ole Sloth Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

In the week ending November, the US crude production hit a whopping 11.6 million bpd, according to Energy Information Administration (EIA) data released on Wednesday.

For the first time, just three producers - the US, Russia and Saudi Arabia - now account for a third of global oil production and both the latter two have, like the US, been increasing production.

Some market watchers believe the Organization of the Petroleum Exporting Countries and allies including Russian Federation may take steps to reduce supply.

Oil peaked in early October on concerns that US sanctions on Iran that came into force this week would deprive the oil market of substantial volumes of crude, draining inventories and bringing shortages in some regions.


Mr. Trump has repeatedly has asked oil producers to pump more crude to lower prices.

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