Oil drops to about US $ 83 as expected Iran will maintain some exports

LONDON (Reuters) – Oil dropped to about $ 83 a barrel on Monday, under pressure from forecasts that some Iranian oil exports would continue to flow after the US reprinted sanctions, easing supplies.

Two Indian companies, major buyers of Iranian oil, have ordered barrels in November, announced Monday the Indian Minister of Petroleum.

The Trump administration is considering canceling the sanctions, a US government official said on Friday.

"In one way or another, it would seem that India will seize Iranian crude," said Petromatrix's Olivier Jakob, adding that this development helped oil to "trace part of the price hike seen last week. "

Brent, the international benchmark LCOc1, lost $ 1.07 to reach $ 83.09 per barrel at 0817 GMT. It hit a four-year high of $ 86.74 last week.

US crude CLc1 was down 93 cents to $ 73.41.

US sanctions will target Iran's crude oil exports starting Nov. 4, and Washington is pressuring governments and businesses around the world to reduce their imports to zero.

"This is one of the main factors supporting crude oil," said JBC Energy analysts in the United States, who reimposed the sanctions imposed on Iran. "That being said, we may already be in the most favorable support phase resulting from this change and the effect is beginning to ease soon."

Oil has also fallen as investors focus on increasing production from other producers, such as Saudi Arabia, the largest exporter, to offset the decline in Iranian supplies.

Saudi Arabia announced last week its intention to increase production by 10.7 million barrels a day in October, indicating that Riyadh would increase its supply to the highest level ever achieved.

"Debate over the fact that Saudi Arabia has replaced all lost Iranian oil" is weighing on prices, said Stephen Innes, trade manager for Asia-Pacific at Oanda, a futures broker.

The concern that the US-China trade war may slow economic growth and weigh on oil demand has also weighed on the market, Asian traders said. Chinese stocks fell sharply on Monday.

Oil has been buoyed by concern that the loss of Iranian exports will leave a slimmer margin of spare production capacity to cope with supply shocks. Saudi Arabia holds the bulk of reserve capacity.

These concerns remain favorable. Innes warned that limited spare production to deal with further supply disruptions meant "capacity is shrinking rapidly due to insatiable demand from Asia".