Oil market held `hostage` by Saudi Arabia, Russia: Iran

Crude Oil Pump

US stock indexes broadly fell yesterday, weighing on oil futures, on expectations that Trump would go ahead with the new tariffs and that Beijing would retaliate.

"Iranian crude oil export loadings have declined by 580,000 barrels per day in the past three months", Bank of America Merrill Lynch analysts said in a note to clients on Monday.

On the other hand, Bloomberg claimed that sources with direct knowledge of the matter said that the White House could announce 10% tariffs on $200 billion worth of Chinese good as early as Monday to eliminate the upbeat mood surrounding crude oil prices.

Output from Iran has hit its lowest level since July 2016 as top buyers India and China distance themselves from Tehran due to looming U.S. sanctions on November 5, according to the International Energy Agency.

U.S. President Donald Trump announced on Monday that Washington would slap 10% tariffs on another $200 billion Chinese imports, except smart watches from Apple (NASDAQ:AAPL) and Fitbit and other consumer products including bicycle helmets and baby auto seats.

Crude has mostly stayed below $70 a barrel since mid-July as a trade dispute between the USA and China threaten global economic growth.

OPEC must stick together for the good of the global economy as founding member Iran faces renewed US sanctions, the head of the cartel said Tuesday - though he did not address how an already-tight market will make up for the loss of Iranian supply.

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Oil traded near $69 a barrel on signs of increased drilling by American producers and investor optimism that Saudi Arabia and Russian Federation will fill in potential supply losses from Iran.

US West Texas Intermediate (WTI) crude was up 83 cents at $69.74 per barrel, after rising over $1 to $69.95.

Washington's withdrawal from the landmark Iran nuclear deal was criticised across the world.

On Monday, Russia's Energy Minister Alexander Novak said that OPEC and non-OPEC members will discuss all possible supply scenarios when they meet this month in Algeria.

"The brinkmanship between Beijing and Washington has the potential to severely impact the competitiveness of US crude oil and petroleum products in the Chinese market, and it will also deter Chinese investment in the USA energy sector", said Abhishek Kumar, senior energy analyst at Interfax Energy in London.

Reuters previously reported that Saudi Arabia wants oil to stay between $70 and $80 a barrel for now, as the world's biggest crude exporter strikes a balance between maximizing revenue and keeping a lid on prices until USA congressional elections.

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