Yemisi Izuora
Oil reportedly steadied on Tuesday, a condition that was prompted by looming US sanctions against Iran’s petroleum industry.
But prices were capped by signs that increased supplies by other major producers, including the United States and Saudi Arabia, could make up for the disruptions from Iran.
The US West Texas Intermediate (WTI) crude futures were at $67.61 per barrel up 7 cents from their last settlement, while the Brent crude futures climbed 11 cents to $77.48 a barrel.
“It was a mixed performance in the crude oil market,” said ANZ bank in a note, pointing to Washington’s sanctions against Iran’s oil exports that will be enforced from November.
Washington is putting pressure on other countries to also cut Iran imports, with close allies like South Korea and Japan, but also India, showing signs of falling in line.
ANZ bank said prices were capped “amid speculation later in the day that Saudi Arabia and Russia will fill any gap.”
US Energy Secretary Rick Perry met with Saudi Energy Minister Khalid al-Falih on Monday in Washington, the US Energy Department said, as the Trump administration encourages big oil-producing countries to keep output high ahead of the renewed sanctions.
Perry is also scheduled to meet with Russian Energy Minister Alexander Novak on Thursday in Moscow.
Russia, the United States and Saudi Arabia are the world’s three biggest oil producers by far, meeting around a third of the world’s almost 100 million barrels per day (bpd) of daily crude consumption.
Combined output by these three producers has risen by 3.8 million bpd since September 2014, more than the peak 3 million bpd Iran has managed during the last three years.
With Middle East crude markets tightening because of the US sanctions against Iran, many Asian refiners are seeking alternative supplies, with South Korean imports of US crude likely hitting a record in November.
At the same time, American oil producers are seeking new buyers for crude they used to sell to China before orders virtually dried up because of the trade disputes between Washington and Beijing.
Traders said this pulled wide open the discount of US WTI crude versus Brent to almost $10 per barrel, the biggest since June.