Oil prices drop as US grants Iran exemption from sanctions 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 import yet, at least temporarily , Iranian crude.

Brent futures in the first month were at $ 72.39 a barrel at 0142 GMT on Monday, down 44 cents, or 0.6% from their last close.

West Texas Intermediate (WTI) Futures Contracts in the United States were down 53 cents, or 0.8%, to $ 62.61 a barrel.

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

This occurred when traders reduced their bullish on crude futures to a one-year low at the end of October, the fifth consecutive drop in a month when prices were higher. sharp decline since July 2016, according to data released Friday.

Prices have been under pressure since it became apparent that Washington was allowing several countries to continue importing Iran's crude despite the sanctions, which officially began 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.

Until now, Washington has not named the eight, called "jurisdictions", a term that could include Taiwan, which the United States does not consider as 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, although it is not a major buyer.

Oil markets have been preparing for sanctions for months.

"Iranian exports and production have been steadily declining … Iran's exports are dropping by more than a million barrels a day (bar / d) between October and May," said Edward Bell of Emirates Bank NBD.

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

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

A slowdown in demand would occur as production increased.

The joint production of the world's major producers – Russia, the United States and Saudi Arabia – exceeded for the first time 33 million bpd in October, up 10 million bpd since 2010.

These three countries alone account for more than a third of consumption.

In the Middle East, the national oil company of Abu Dhabi (ADNOC) plans to raise its oil production capacity to 4 million bpd by the end of 2020 and to 5 million bpd here. 2030, announced Sunday ADNOC, against just over 3 million currently bpd.

(Report by Henning Gloystein, edited by Richard Pullin)