Oil rises as U.S. drilling stalls, Washington sanctions on Iran loom

Oil rises as U.S. drilling stalls, Washington sanctions on Iran loom

Oil prices rose on Monday as U.S. drilling for new production stalled and as the market eyed tighter conditions once Washington’s sanctions against Iran’s crude exports kick in from November, Reuters reports.

U.S. West Texas Intermediate (WTI) crude futures were at $68.23 per barrel at 0640 GMT, up 48 cents, or 0.7 percent, from their last settlement.

Brent crude futures climbed 64 cents, or 0.8 percent, to $77.46 a barrel.

U.S. energy companies cut two oil rigs last week, bringing the total count to 860, energy services firm Baker Hughes said on Friday.

The U.S. rig count has stagnated since May, after staging a recovery since 2016, which followed a steep slump the previous year amid plummeting crude prices.

Outside the United States, new U.S. sanctions against Iran’s crude exports from November were helping push up prices.

Energy consultancy FGE said several major Iran customers like India, Japan and South Korea were already cutting back on Iran crude.

“Governments can talk tough. They can say they are going to stand up to Trump and/or push for waivers. But generally the companies we speak to ... say they won’t risk it,” FGE said.

“U.S. financial penalties and the loss of shipping insurance scares everyone,” it said in a note to clients.

Violence in Iraq, including a rocket attack on Basra airport on Saturday, also sparked fears of supply disruptions, although so far there have been no interruptions to oil exports.

With U.S. rig activity stalling and Iran sanctions looming, the oil market outlook is tightening.

“Investors have largely turned positive again ... likely welcoming the return of backwardation,” said Edward Bell, commodity analyst at Emirates NBD bank.

Backwardation describes a market in which prices for immediate delivery are higher than those for later dispatch. It is considered a sign of tight conditions giving traders an incentive to sell oil immediately instead of storing it.

The Brent backwardation between October this year and mid-2019 is currently around $2.20 per barrel <0#LCO:>.

While Washington exerts pressure on other countries to fall into line and also cut imports from Iran, it is also urging other major producers to raise their output in order not to create too strong a price spike.

U.S. Energy Secretary Rick Perry will meet counterparts from Saudi Arabia and Russia on Monday and Thursday, respectively, as the Trump administration seeks the world’s biggest exporter and producer to keep output up.

One key question going forward is how demand develops amid the trade dispute between the United States and China, as well as general emerging market weakness.

Asian shares on Monday were on track for their eighth straight session of declines, while China’s yuan and India’s rupee also came under renewed pressure as U.S. President Donald Trump threatened yet more import tariffs on Chinese goods.

Consultancy FGE warned that “trade wars, and especially rising interest rates, can spell trouble for the emerging markets that drive (oil) demand growth”.

Despite this, FGE said the likelihood of significantly weaker oil prices was relatively low as the Organization of the Petroleum Exporting Countries (OPEC) would withhold output to prevent prices from plunging.

“We see $65 per barrel as a trigger for cuts,” FGE said.

Turkish cement in great demand in Turkmenistan’s construction markets
Turkish cement in great demand in Turkmenistan’s construction markets
BMB Trade Group develops project for livestock complex in Uzbekistan
BMB Trade Group develops project for livestock complex in Uzbekistan
U.S. current account deficit surges 52.9% in second quarter
U.S. current account deficit surges 52.9% in second quarter
Loading Bars
Latest
Azerbaijan’s mining, IT companies sign tender contract
Georgian finance minister elected chairman of ADB board of governors
Baku Stock Exchange includes AzerGold's bonds in listing
Baku holds video conference entitled "Heritage of Caucasian Albania" (VIDEO)
Clients of Azerbaijan's bankrupt Standard Insurance receive compensations
Georgia continues projects of Winter resort in Gudauri
Turkish cement in great demand in Turkmenistan’s construction markets
Azerbaijani MP: Armenia's draft law on so-called "genocide" aims to deceive world community
Azerbaijani oil prices continue to grow
ENKA Renewables: Namakhvani HPP Cascade project to have substantial impact on property tax
BMB Trade Group develops project for livestock complex in Uzbekistan
U.S. current account deficit surges 52.9% in second quarter
Companies reserving capacity in IGB disclosed
Gold, silver prices in Azerbaijan rebound
Requirements to oil&gas service companies to be revised in Kazakhstan
Turkmenistan working to improve transport, customs systems
Firefighter dies in California wildfire - U.S. Forest Service
IGB to start commercial operations by July 2021
Germany to send observers for Georgia’s parliamentary elections
Iran expected to launch neobanks by 2021
S.Korean, Azerbaijani officials discuss healthcare co-op
Number of gas consumers increased in Turkmenistan’s Lebap region
Rami Levy said mulling withdrawal from Delek Israel deal
Azerbaijani economy ministry: Digitalization - important component of economic dev't
Azerbaijan confirms 135 more COVID-19 recoveries
Baku International Energy Charter Forum to be held online
Azerbaijan's oil pumping through BTC pipeline shrinks
International tourism restrictions to be canceled in Uzbekistan
Azerbaijani president congratulates president of Nepal
Sulfur production increases in Kazakhstan in Aug, 2020
Russia to invest in modernization of power generation field of Uzbekistan
Kazakhstan, Turkmenistan in talks on gas exports
Minister: Georgia moving towards period of adaptation
Average daily volume of gas production at Turkmenistan’s Uchaji field revealed
Azerbaijan Deposit Insurance Fund continues compensating depositors of closed banks
Azerbaijan raises propylene production
Georgia sees increase in hazelnuts exports
Pumps producer terminates memorandum with Kazakhstan's largest oil pipeline company
Kazakh coal extracting venture opens tender to buy vehicles
Iran's industrial production increases
French imports of leather goods from Turkey down
Georgia imports more steel from Turkey
Volume of delivered oil at Turkmenbashi Oil Refinery published
Azerbaijan unveils timeframe for commissioning road to highest mountainous village
Central Bank of Azerbaijan lowers interest rate
Azerbaijani ambassador talks Armenia's military provocation against Azerbaijan in popular US radio show
Iran and Pakistan discuss trade between border provinces
PETRONAS's upstream volumes to fall by about 4%
Ryanair cuts October capacity, blames travel restrictions
BMB Trade Group eyes to expand export products of Uzbekistan
“My Bakcell” – the ultimate solution for managing your account
EBRD to back up solar plant construction in Kazakhstan’s Karaganda
Kazakh Ministry of Ecology talks restrictions in industry sector
Georgia reveals volume of exported peaches and nectarines
Minister: Issue of Armenians destroying Azerbaijani historical monuments always on agenda
Georgia’s foreign debt increases
Turkmenistan, Kazakhstan interested in joint gas chemical projects
Kazakhstan's petroleum products export to Russia down twofold
Turkmenbashi sea port opens tender for repair of harbor crane
First Vice-President Mehriban Aliyeva makes Instagram post on National Music Day (PHOTO)
Italy to assist in attracting EU companies for cooperation with Azerbaijan
US plans to sign 5G security memorandum with Georgia
Uzbekistan achieves chemical enterprises development despite COVID-19
Nagif Hamzayev: The spectator approach to the process exacerbates the situation
Jordan to jail organisers of large social events to stem COVID-19 spike
PMCG reveals August dynamics of hotel prices in Georgian regions
Azerbaijan expanding use of modern irrigation systems
SOCAR starts repair of submersible electric motors
Russia records 5,905 new daily coronavirus cases
Apple to launch first online store in India next week
Israel imposes second coronavirus lockdown during high holidays
Ambassador: Italian companies interested in Azerbaijan
Gazprombank: Azerbaijani economy to rebound by year-end
Uzbekistan resumes international transport communication
Impetus to be given to cargo traffic through ports of Kazakhstan, Turkmenistan
Real Gross Domestic Product declines in Georgia
EU: Cooperation with Azerbaijan on oil, gas supply continues despite COVID-19 pandemic
SOCAR Turkey’s Kayserigaz expanding to new areas
Uzbek confectionery to be exported to China
Kazakhstan developing mineral resources data system
Letter of Azerbaijan's FM on Armenia's illegal activities in occupied Azerbaijani lands published as UN document
Timeline for commissioning railway to Azerbaijan's Gabala revealed
COVID-19 cases exceed 3,000 in Georgia
UK retail recovery continues apace in August
Ericsson to acquire Cradlepoint in $1.1 billion deal
Kazakhstan's revenue from transporting cargo via internal water surges
Azerbaijan's State Customs Committee, World Bank to implement joint projects
Georgian APM Terminals Poti handles out of gauge cargo with mobile harbor cranes
GIE highlights Southern Gas Corridor’s role in ensuring South-East Europe’s energy security
Turkmenistan, Saudi Arabia to increase partnership in oil, gas sector
Number of coronavirus cases in Uzbekistan approaches 50,000
New textile shops opened in Turkmenistan
Azerbaijani currency rates for Sept. 18
Emirates sets up Kosher Arabia for airline food
Number of Turkish migrant workers in Israel rises
European gas infrastructure to help deliver Green Deal objectives
Kazakh demand for real estate in Turkey grows
Azerbaijan’s postal operator joins Central Bank's search system
Road expansions on Azerbaijani-Russian border
Iran discloses details of exports via Kermanshah Province
All news