Oil drops as US grants Iran sanction exemption to eight importers

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By Henning Gloystein

SINGAPORE (Reuters) – Oil prices fell on Monday, as US sanctions against Iran's fuel exports were eased by waivers that will allow some countries to still import, at least temporarily , Iranian crude.

Brent futures in the first month , the international benchmark for oil prices was $ 72.53 a barrel at 00:30 GMT on Monday, down 30 cents, or 0.4% from their last close.

West Texas Intermediate (WTI) Futures Contracts in the United States were down 27 cents, or 0.4%, to $ 62.87 a barrel.

Brent has lost more than 16% in value since early October, while WTI has declined more than 18% since then.

Traders said prices were under pressure since it had become clear that Washington was allowing several countries to continue importing Iran's crude despite the sanctions, which officially began on Monday.

The United States announced on Friday that it would temporarily allow eight importers to continue buying Iranian oil during the reimposition of sanctions, with the aim of compelling Iran to reduce its nuclear activities, missiles and its regional activities.

US Secretary of State Mike Pompeo, who announced the decision, did not name the eight, which he termed "jurisdictions," a term that could include importers such as Taiwan, which the United States does not consider not like a country.

China, India, South Korea, Turkey, Italy, the United Arab Emirates and Japan were the main importers of Iranian oil, while Taiwan occasionally buys Iranian crude oil shipments but is not a major buyer.

"All eyes will be on the outcome of negotiations on possible waivers of US sanctions against Iran.Any agreement allowing oil importers to continue buying from Iran could lead to further pressure on prices, "ANZ bank said on Monday.

Oil markets have already adapted to sanctions imposed by Iran, gradually reducing imports in preparations.

"Iranian exports and production have declined steadily in advance.Market studies on Iranian exports reveal a drop of more than a million barrels a day (bpd) from October to May" said Edward Bell, commodity analyst at Emirates NBD.

On the demand side, Bell warned that consumption could slow down due to an economic slowdown, as evidenced by the sharp decline in refining profits for essential fuels such as gasoline.

"The weakening of refining margins while crude prices are low sends us a very telling message: the demand is underperforming," he said.

(Report by Henning Gloystein, edited by Richard Pullin)