Oil reserves in western Europe, Africa and Mediterranean region are rapidly falling since major buyers are scared by the US sanctions imposed on Iran, reports say.
According to Reuters, oil prices slipped on Friday as concerns over the impact of a global trade war depressed sentiment, although impending U.S. sanctions on Iran and falling Venezuelan output limited losses.
Benchmark Brent crude oil (LCOc1) was down 40 cents a barrel at $77.37 by 1100 GMT. U.S. light crude (CLc1) was 50 cents lower at $69.75.
“The oil market is once again tightening,” analyst at Swiss bank UBS in Zurich, Giovanni Staunovo, told Reuters, adding, “Iranian oil export declines are already visible well in advance of U.S. oil-related sanctions, which enter into force in November.”
Iranian crude exports are likely to drop to a little more than 2 million barrels per day (bpd) in August, against a peak of 3.1 million bpd in April, as importers bow to American pressure to cut orders.
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC), in which Iran is the third-biggest producer, will discuss in December whether it can compensate for a sudden drop in Iranian supply after sanctions start in November, the head of Iraq’s state oil marketer SOMO, Alaa al-Yasiri, said on Wednesday.
Crude exports from crisis-struck OPEC member Venezuela have also fallen sharply, halving in recent years to about 1 million bpd.
Official U.S. oil inventory data on Wednesday also helped the bullish trend.
U.S. commercial crude inventories fell by a larger than expected 2.6 million barrels in the week to Aug. 24, to 405.79 million barrels, the Energy Information Administration said.
Furthermore, Reuters had earlier reported that Iranian oil and condensate exports in August had dropped to 2 million and 50,000 barrels which is 500,000 less than its average in August 2017.
Wall Street Journal also quoted industrial sources as saying that Iranian oil export is expected to drop to 1.5 million barrel per day next month.
During last year, Iran used to export 2.5 million barrels of oil and natural gas condensate in average per day.
Iranian oil exports are rapidly dropping, Reuters had reported on Thursday, noting that major buyers of Iranian crude are looking for new reserves to replace them with Iran.
Iranian oil exports drop to 1.5 million barrels per day means that Tehran has lost one third of its crude exports which is much higher than what international institutes had predicted.
Earlier, International Energy Agency (IEA) had predicted that Iranian oil export, under US sanctions, will lose 900,000 barrels per day before the end of the next year.
Nevertheless, recent reports show that Iran is going to lose its oil export much more than expected. The same reports say that Iran will lose 1m barrel per day of its oil and condensate exports in less before the end of next month.
Iran's crude oil and condensate exports in August are set to fall below 70 million barrels for the first time since April 2017, preliminary trade flows data has shown. China's imports of Iranian crude rose 27 percent in July from a year ago to 722,000 bpd, according to Reuters oil flow data on Eikon.
China, India, Japan and South Korea last month imported 1.87 million barrels per day (bpd) from Iran, according to the data. That was up 23.3 percent from a year ago and the highest since last September. But overall purchases of crude from Iran by the four countries are expected to drop significantly in coming months, with U.S. sanctions on the nation's oil exports due to start on Nov. 4. Washington has asked buyers of Iranian oil to cut imports to zero in the run up to that time to force Tehran to negotiate a new nuclear agreement and to curb its influence in the Middle East.
Reuters, Bloomberg, OPEC, Radio Farda