United States oil shipments to India fell to 84,000 barrels per day (bpd) last month, down 75 per cent from a record high of 347,000 bpd in June, Kpler data showed. Front-month ICE Brent futures settled above $86/b Wednesday, the highest in four years, before dropping back below $85/b Thursday.
While the Trump administration previously indicated an intent to bring Iranian crude exports "down to zero", a US official confirmed this weekend that the White House is "in the midst of an internal process" that could result in issuing so-called Significant Reduction Exemptions "on a case-by-case basis". This push to up supply at the U.S.' behest has already had lucrative consequences for the Saudis, so it is likely that economics and the promise of increased oil sales may have pushed Russian Federation to cooperate in private with the USA effort to increase the oil supply from countries other than Iran.
Brent fell a mere 20 cents to $84.38, while WTI rose 1 cent to $74.34, these numbers said to be the outcome of the USA unemployment rate falling to a 49 year low of 3.7 percent and somewhat mitigating fears about the sanctions. India is trying to import crude oil to Iran by $ 1.25 million tonnes of imports from the Indian Oil Corp (IOC) Mangalore.
Despite US' sanctions coming in force from November 4, India, the world's third largest oil importer, is all set to buy 9 million barrels of Iranian oil next month, reports Reuters.
"Saudi Arabia's effort to ramp up production seems to be only enough to mitigate the effect of lower supply from Iran and Venezuela, but not fully replace it", said Jens Naervig Pedersen, senior analyst at Danske Bank A/S in Copenhagen. Saudi Arabia at present produces 10.7 million barrels per day.
U.S. sanctions will start targeting Iran's crude exports from November 4, and Washington is putting pressure on governments and companies globally to fall in line.
Meanwhile, the US Energy Information Administration (EIA) reported a huge increase in weekly crude oil inventories.
With Iran sanctions still on the table, potential spare capacity constraints and also a slowdown in United States drilling, USA bank J.P.Morgan said in its latest cross-asset outlook for clients that it recommended to "stay long Jan '19 WTI on supply risks to crude". The deal was struck as oil prices began to climb towards $80 per barrel.
The Iranians have ignored the treaty "for an awfully long time", Mr Pompeo told reporters.
India had planned to import about 25 million tons of crude oil from Iran in the current fiscal, up from 22.6 million tons imported in 2017-18.
"The Saudis won't flood the market and they don't want to see it oversupplied", UBS Group AG analyst Giovanni Staunovo said.