LONDON: Benchmark Brent crude oil on Tuesday was down 55 cents a barrel at $79.28 by 0735 GMT. US light crude was 35 cents lower at $69.01.
Shipping brokerage Eastport said crude prices were “expected to decline in coming months, as rising production in the US offsets increasing global demand”.
US crude oil production has climbed by almost a third since mid-2016 to around 11 million barrels per day, and rising drilling activity points to further increases.
Reflecting a cautious outlook, traders have been curbing their exposure to oil markets by shutting long positions in crude futures, with fund managers cutting their combined positions by 187 million barrels in the last three weeks, according to exchange and regulatory data.
The oil prices also fell after Saudi Arabia said it would play a ‘responsible role’ in energy markets, although sentiment remained nervous ahead of new US sanctions on Iran’s crude exports that start next month.
The US sanctions on Iranian oil begin on November 4, and Washington has said it wants to stop all of Tehran’s fuel exports.
Saudi Arabia says it will keep markets supplied, and there are signs that crude exports from the Middle East are rising.
Saudi Energy Minister Khalid al Falih said on Monday that Saudi Arabia would play a “constructive and responsible role” in world energy markets.
Economist Intelligence Unit energy analyst Peter Kiernan said it would be self-defeating for Saudi Arabia to cut oil supply as it would “risk losing market share to other exporters while losing its reputation as a stable actor in the market”.
Despite this, Sukrit Vijayakar, director of energy consultancy Trifecta, said “markets are... wary of the impact of US sanctions on Iran’s oil sector”, estimating sanctions “could impact up to 1.5 million barrels per day of supply”. — Reuters
Oman Observer is now on the WhatsApp channel. Click here
