OIL PRICE CRISIS: Oil prices RISE despite US-China trade war fears

Cornelia Mascio
Luglio 23, 2018

Meanwhile, yet another example of one country's ability to compensate for interruption of crude production in another came on Friday in the form of news that Italy's imports of usa crude shot up to a record in June, after attacks by militants closed two major oil ports in Libya and cut off most deliveries from that country.

Supply to the US market has also been squeezed by the loss of some Canadian oil production.

Despite the surprise crude oil build and the record production in the United States, the WTI prices for September delivery rose on Wednesday 1 percent as the market paid close attention on declines in gasoline and distillates inventory levels.

The Saudis and their allies - which include several neighbors from the Gulf Cooperation Council and also non-OPEC producer Russian Federation - promised at the Organization of Petroleum Exporting Countries' last meeting in late June to increase output by about 1 million barrels a day to offset disruptions in Venezuela and Libya, plus the looming losses in Iran.

Perhaps the production in the USA will grow even more, Rystad Energy said. The contract is down 3 percent this week.

The impact of US sanctions on Iran's oil shipments, which remains highly uncertain, will play a big part in determining the final outcome.

The drop in the price of oil has been aided by Libya restoring halted output and the USA signaling it may show some flexibility in sanctions on Iranian oil. The gains represent a rapid increase in output, as the data, if confirmed by monthly figures, puts the United States as the second largest producer of crude oil, just behind Russian Federation, which was producing 11.2 million bpd in early July.

Saudi Arabia is expecting a reduction in crude oil exports next month, despite earlier signs that Saudi Arabia-and Russia-have started to raise production even before the June 22 meeting with OPEC that sought to address the shrinking global oil supply and corresponding rising prices. In addition, Angola's crude oil production also fell due to insufficient investment, which causes OPEC's crude oil production is significantly lower than previously established standards. Now, the problem is Iran's exports will be affected to what extend?

As a result, the kingdom seems to be having difficulty right now placing all the barrels it wanted to, it quoted people who had spoken with the Saudis as saying.

The U.S. Energy Information Administration (EIA) reported that on July 18 the production of U.S. oil reached 11 million barrels per day for the first time. Total volume traded was about 29% below the 100-day average.

With so many factors shifting the balance between global supply and demand, the appetite for additional Saudi crude may change, especially as the extent of Iran's losses becomes clearer. Rouhani made his comments a day after Iran's Supreme Leader Ayatollah Ali Khamenei said that negotiating with the U.S. would be useless. "And spare capacity is getting very tight very quickly".

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