Summary:
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US give 8 nations Oil wavers on Iran sanctions
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Decision weighed on cutting Iran revenue but averting oil price spike
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Oil near lows and set for another weekly loss
The imminent US sanctions on Iran have been a key driver of the Oil price in recent months, with crude hitting a 4 year high at the start of October on fears of a sharp supply shock, before the market tumbled as the fears were allayed. This afternoon, on the eve of these sanctions coming into effect there’s been some further developments on this front with the US announcing waivers for several countries purchasing Iranian oil. Eight countries including Japan, India, and South Korea will keep buying Iranian crude after the US reimposes sanctions from Monday 5th November.
Oil has dropped lower once more today with the market looking set for another big week of losses. The break below 75.20 on Wednesday proved significant and while price remains below here further declines towards 70.40 are possible. Source: xStation
Iran is an important producer in OPEC and while the organisation has said that it will strive to make up any shortfall in output if the sanctions are imposed strictly, there were doubt that this would curtail global supply and drive oil higher. Some analysts were even calling for $100 a barrel crude in the not too distant future, but this latest softer approach to implementation from the US will further allay these fears of a spike higher in prices. China -- the leading importer of Iranian oil -- is still in discussions with the U.S. on terms, but is among the eight, according to two people familiar with the discussions who also asked not to be identified. The other four countries that will get waivers weren’t identified.
Oil is set for a 4th consecutive weekly loss and one of the largest in the past couple of years. Having said that the market does appear to remain in a longer term uptrend and as long as 70.40 isn’t broken below then the downside is limited. Source: xStation
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