Oil prices down on Iran sanction exemptions, demand concerns
Oil prices declined on Tuesday after Washington granted sanctions exemptions to top buyers of Iranian oil, lifting supply concerns and turning the market's focus to worries that an economic slowdown may curb fuel demand.
Benchmark Brent crude futures LCOc1 were down 20 cents at 72.97 US dollars a barrel by 0929 GMT.
US West Texas Intermediate crude futures CLc1 were at 62.98 US dollars a barrel, down 12 cents from their last settlement.
Washington gave 180-day exemptions to eight economies - China, India, S. Korea, Japan, Italy, Greece, Taiwan and Turkey. This group takes as much as three-quarters of Iran's seaborne oil exports, trade data shows, meaning Iran will still be allowed to export some oil for now.
Iran's crude exports could fall to little more than one million barrels per day (bpd) in November, roughly a third of their mid-2018 peak. But traders and analysts say that figure could rise from December as importers use their waivers.
China was given a waiver to import around 360,000 bpd from Iran during the exemption period, according to Reuters, while S. Korea was given a daily quota of around 130,000 bpd, according to Platts.
Japan said on Tuesday it would soon raise imports from Iran in accordance with the waivers.
The United States on Monday restored sanctions targeting Iran's oil, banking and transport sectors and threatened more action to stop what Washington called its “outlaw” policies.
Meanwhile, concerns about demand continue. The trade dispute between the United States and China threatens growth in the world's two biggest economies and currency weakness is pressuring economies in Asia, including India and Indonesia.
On the supply side, oil is ample despite the sanctions against Iran as output from the world's top three producers - Russia, the United States and Saudi Arabia - is rising.
The three countries combined produced more than 33 million bpd for the first time in October, meaning they alone meet more than a third of the world's almost 100 million bpd of crude oil consumption.
Amid ample supply, top crude exporter Saudi Arabia has cut the December price for its Arab Light grade for Asian customers.
The price pressure on oil has scared off financial traders.
Hedge fund managers were net sellers of petroleum-linked futures and options last week, taking their net long position to the lowest level in 15 months, according to records published by regulators and exchanges.