Oil up on Iran sanctions


West Texas Intermediate crude for September delivery rose as much as 32 cents to $67.95/bbl on the New York Mercantile Exchange and traded at $67.69 at 9:35 a.m.in Singapore.

On Tuesday, October WTI crude oil settled at $66.33, down $0.24 or -0.36% and October Brent crude oil finished the session at $72.46, down $0.15 or -0.21%.

Oil prices dipped on Tuesday as rising trade tensions dented the outlook for fuel demand growth especially in Asia, although USA sanctions against Iran still pointed towards tighter supply.

With strong global demand and if the fears of Turkish economic contagion are overblown, we could see a very tight oil market.

Prices have been suppressed below US$70 this month as fears of a trade war between the USA and China temper gains, with neither side showing signs of backing down.

That is compounding worries that a deepening trade war between the United States, China and the European Union will squeeze business activity in the world's biggest economies.

Meanwhile, investors are watching the impact of US sanctions on Tehran, which analysts say could remove as much as 1 million bpd of Iranian crude from the market by next year.

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Japan and South Korea, where summer consumption was bumped up by an unusual heat wave, jointly imported around 6.3 million bpd of crude in July, compared with an average of 6 million bpd in the first half of the year.

"The high crude prices appear to have been taking a toll on demand", said Sukrit Vijayakar, Director of Indian oil consultancy Trifecta.

Hedge funds and other money managers reduced their bullish positions in US crude futures and options in the week ending 7 August, data from the US Commodity Futures Trading Commission showed on Friday.

USA crude inventories rose unexpectedly last week, climbing 6.8 million barrels in spite of refinery crude runs hitting a record high, the Energy Information Administration's data showed.

Despite the cautious mood in oil markets, bullish sentiment found some support from expectations that US sanctions against Tehran would restrict Iranian crude exports, tightening global supply. This is subjected to the U.S sanctions on the oil exports from Iran, returning in the month of November.

Under pressure over rising gas prices, Trump in July called on the Organization of Petroleum Exporting Countries to bring down oil prices.

On Friday, Bloomberg also reported that the Islamic Republic's state-run National Iranian Oil Company was planing to reduce official prices for September sales to Asia to their lowest level in 14 years.