Oil prices firm on Iran sanctions, but rising global supply caps market
By Henning Gloystein
SINGAPORE, Aug 29 (Reuters) – Oil markets were stable on Wednesday, buoyed by falling supplies from Iran ahead of U.S. sanctions but held in check by rising production outside the Organization of the Petroleum Exporting Countries.
International Brent crude oil futures were at $76 per barrel at 0030 GMT, up 5 cents from their last close.
U.S. West Texas Intermediate (WTI) crude futures were up 6 cents at $68.59 a barrel.
Traders said crude prices have been supported by the prospect of U.S. sanctions against Iran, which will start to target its oil industry from November.
Bowing to pressure from Washington, many crude buyers have already reduced orders from OPEC’s third-biggest producer.
Despite Tehran offering steep discounts, the total volume of crude oil, including condensate, to load in Iran this month is estimated at 64 million barrels, or 2.06 million barrels per day (bpd), versus a peak of 92.8 million barrels, or 3.09 million bpd, in April, preliminary trade flows data on Thomson Reuters Eikon showed.
RISING NON-OPEC SUPPLY
Despite the risk of disruption especially from OPEC-countries like Venezuela, Iran, Libya and Nigeria, Bank of America Merrill Lynch said global supply could climb towards year-end.
“Heading into 4Q18, we expect rising non-OPEC oil production as supply outages abate and greenfield projects ramp up,” the U.S. bank said in a note to clients.
“Currently, non-OPEC supply outages are at a 15-month high of 730,000 barrels per day. However, nearly half of these volumes are in the process of being restored,” it said.
Adding to that will be new production in Canada, Brazil and from the United States, which the bank said “should provide a substantial boost to non-OPEC supplies” during the second-half of the year “taming upside pressures on Brent crude oil prices”.
Bank of America said it expected Brent prices to be in a $65 to $80 per barrel range “until Iran sanctions start to bite” in the first-half of 2019.
(Reporting by Henning Gloystein Editing by Joseph Radford)
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