The sanctions, which would come into force from November 4, are likely to block current payment routes used to pay for Iranian imports.
Hindustan Petroleum was said to have cancelled a crude oil shipment from Iran after its insurer refused to provide coverage for the cargo on concern about USA sanctions.
OPEC allows Saudi Arabia to deflect criticism of its production decisions and helps separate oil policy from other aspects of the bilateral relationship such as security and policy towards Iran.
Indian PSUs, which last fiscal cut oil imports from Iran by a quarter, bought 5.67 million tonnes of crude oil from the Persian Gulf nation during April-June.
The WTI Crude Oil market fell rather significantly during the trading session on Wednesday, and then got an extra boost as although inventory was taken out in the United States, it was only about half of what had been anticipated. The US will also target business conducted by foreign financial institutions with the Central Bank of Iran.
Furthermore, oil prices were dragged down by the increasing output of the Organization of the Petroleum Exporting Countries (OPEC) and Russian Federation.
A slump in the greenback’s value makes dollar-denominated gold less expensive for owners of other currencies.
Exports to South Korea fell to zero as it is already starting to find alternative supplies to Iranian condensates after pressure from the US.
The sequence of events confirms the locus of decision-making and power has shifted decisively away from OPEC and OPEC+ to Saudi Arabia and Russian Federation. However, Iranian exports will fall.
Iran is India’s second-largest oil supplier, after Iraq.
“There is room for [prices in] the crude market to soften a bit more”, says John Woods of JJ Woods Associates, adding that inventories could rise further as refineries head toward maintenance season after the summer driving season. But that doesn’t mean the Iran sanctions won’t have an effect on prices. Some analysts warned that a global heat wave could also now affect oil demand.
That means there is much less slack in the oil market than before. The country’s oil industry is starved of the capital and expertise necessary to maintain production.
Prices of the barrel of the American reference for the sweet light crude oil are falling further today, breaking below the $68.00 mark per barrel.
Gasoline stocks USOILG=ECI rose by 2.9 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.7 million barrel drop.
Similarly, Libya is in the midst of a bitter civil war. OPEC and Russian Federation reported an increase in their output by 300,000 and 150,000 barrels per day in July, respectively.