Crude Oil Prices Slump 20% From October Highs, Enter Bear Market

Marco Green
November 9, 2018

Saudi-led oil cartel and its allies, including Russian Federation, decided in June to relax output curbs in place since 2017, after pressure from United States (U.S.) President Donald Trump to reduce oil prices and make up for supply losses from Iran. With major cuts in the cheaper oil imports from Iran, the overall oil import bill is bound to rise further with its consequent adverse effect for the economy. The countries exempted from the U.S. sanctions on Iran's oil exports include China, India, Greece, Italy, Taiwan, Japan, Turkey and South Korea, which together took in over 80 percent of Iran's oil exports past year.

The sanctions, however, threatened India's ability to obtain financing for the development of Chabahar, which could potentially open the way for millions of dollars of trade for land-locked Afghanistan and end its dependence on Pakistan's port of Karachi.

"We've already reduced Iranian crude oil experts by over a million barrels per day".

JP Morgan said "the lack or difficulty in acquiring shipping insurance will help in reducing exports quickly as they did during last global sanctions".

The top USA diplomat has granted an exception to certain U.S. sanctions that will allow the India-led development of a port in Iran as part of a new transportation corridor created to boost Afghanistan's economy, a State Department spokesman said on Tuesday.

India was among the eight countries that were granted temporary waiver for purchase of Iranian oil.

For further details, see below.

China, the world's biggest importer of crude oil, is also the top buyer of Iranian oil, and its mostly state-owned refiners have lobbied hard for waivers.

That would be about half the daily average China has been importing from Iran since January 2016, trade data showed. The United States has taken this arbitrary step after announcing withdrawal from the nuclear agreement with Iran in May this year. The port project is simply too critical for India and can benefit Afghanistan immensely.

More U.S. oil will likely come.

Chabahar is the only Iranian port with direct access to the Indian Ocean.

A collision between an oil tanker and a military frigate off Norway's coast temporarily shut down the nation's largest crude-export terminal, halted the pumping of several North Sea grades, and boosted immediate natural gas prices in the United Kingdom. The U.S. crude CLc1 rose 58 cents to $62.79. In turn, the USA would give a waiver to India to continue the import of Iranian oil in progressively lesser quantities for six months.

In 2017-18, India imported 22.6 million tonnes of oil from Iran.

The won-denominated payments will go into escrow accounts handled by the Industrial Bank of Korea (IBK) and Woori Bank.

Even with US sanctions on Iranian oil in place, investors believe there is more than enough supply to meet demand. The oil import bill for the current financial year, 2018-19, is expected to rise to $125 billion, i.e., by 42 per cent. This most recent downward spiral has taken five weeks.

Other reports by Click Lancashire

Discuss This Article

FOLLOW OUR NEWSPAPER