Oil prices rose about 1 percent on Tuesday after USA sanctions on Iranian goods went into effect, intensifying concerns that sanctions on Iranian oil, expected in November, could cause supply shortages.
Prices of the barrel of the West Texas Intermediate are trading on a weaker footing today after the EIA reported USA crude oil inventories decreased less than initially estimated by 1.351 mbpd during the week ended on August 3.
West Texas Intermediate (WTI) crude for September delivery traded at $68.83 a barrel on the New York Mercantile Exchange, down 18 cents, at 9:05 a.m.in Tokyo.
Iran is said to have started to offer India cargo insurance and tankers operated by Iranian companies as some Indian insurers have refused to cover oil cargoes from Iran in the face of the returning US sanctions on Tehran. "News from key buyers suggests the market is already adjusting to the new regime", ANZ bank said in a note on Wednesday.
"We have always been a strong energy partner for India", he added, while responding to a question on whether Saudi Arabia would step in to help if the U.S. sanctions led to a drying up of oil supplies from Iran, which became India's second biggest energy supplier in May.
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Trump has said Saudi Arabia's ruler King Salman had agreed to his request and would soon raise oil output by up to 2 million barrels per day (bpd) to make up for shortfalls due to Iran. That figure is roughly equivalent to 3 percent of the world's oil demand.
Meanwhile, U.S. crude production, which has climbed dramatically fuelled largely by increased output from shale formations, may now rise more slowly as prices drop, according to the U.S. Energy Information Administration's monthly report.
Tuesday evening the American Petroleum Institute (API) reported that crude inventories dropped by 6 million barrels in the week ending August 3.
Distillate inventories rose by 1.2 million barrels last week and are about 10% below the five-year average range for this time of year.
China is slapping additional tariffs of 25 percent on $16 billion worth of USA imports, from fuel and steel products to autos and medical equipment.
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Week over week, US crude oil exports rose by 540,000 barrels a day, and USA production dipped by 100,000 barrels a day to 10.8 million barrels.
As for the gold commodity, the precious metal perked up on Wednesday with the dollar slumping.
New Delhi imported 771,000 barrels of crude oil a day from Tehran in May, a 35% increase over April.
A weaker USA dollar also made the greenback-priced commodity more attractive for holders of other currencies.
"Gold is consolidating here for the moment".
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