Oil dives while Saudi Arabia pledges to play a "responsible role" in the market

SINGAPORE (Reuters) – Oil prices fell on Tuesday after Saudi Arabia pledged to play a "responsible role" in the energy markets, although sentiment remains nervous in the prospect of US sanctions against Iranian crude oil exports starting next month.

The Brent crude oil futures at the beginning of the month, LCOc1, were at $ 79.62 per barrel at 0427 GMT, down 21 cents (0.3%) from their last close.

The West West Intermediate (WTI) US CLC1 futures price was $ 69.26 per barrel, yielding 10 cents of their latest settlement.

US sanctions against Iranian oil exports are due to start on November 4th.

As the largest crude oil exporter, Saudi Arabia has pledged to maintain market supplies despite its growing isolation from the killing of Saudi journalist Jamal Khashoggi.

At a time when US sanctions against Iran were tight, Saudi Arabia could reduce its supply of crude in retaliation for possible sanctions against him following the murder of Khashoggi.

Saudi Energy Minister Khalid al-Falih said Monday that he "had no intention," and that Saudi Arabia would play a "constructive and responsible role" on global energy markets.

Peter Kiernan, senior energy analyst at the Economist Intelligence Unit of Singapore, said a Saudi cut would be counterproductive as "Saudi Arabia risks losing market share. for the benefit of other exporters, while losing its reputation as a stable player in the market. "

Despite this, Sukrit Vijayakar, director of the Trifecta Energy Council, said that "the markets are tired of the consequences of US sanctions on the Iranian oil sector", saying that these sanctions "could have an impact on 1.5 million barrels per year. day of supply. "

JP Morgan has raised its Brest price forecast for 2019 from $ 20.50 a barrel to $ 83.50, saying "this bullish argument is heavily motivated by tightening of supply because of sanctions imposed by the Iran and by decreasing reserve capacity ".

Everyone is not so optimistic. Carrier Eastport said crude prices "are expected to fall over the next few months, as rising US production offsets rising global demand."

US crude oil production C-OUT-T-EIA has grown by almost one-third since mid-2016 to approximately 11 million barrels per day, and drilling activity is expected to increase still increase.

Reflecting a cautious outlook, traders have limited their exposure to oil markets by removing long positions on crude, as fund managers have reduced their combined positions by 187 million barrels in total over the last three weeks, according to stock data. and regulatory.