A first batch of USA sanctions against Iran, which shipped out nearly three million barrels per day (bpd) of crude in July, officially came into effect Tuesday.
Goldman Sachs insists we are heading for a "very, very tight oil market". However, July imports still ranked as the third lowest monthly level this year, Reuters reported.
In Iran, America's first round of sanctions hit on 7 August and a second, tougher set targeting oil sales, will take effect on 5 November.
From November, Washington will also target Iran's petroleum sector.More news: Pence says U.S. has never needed a 'Space Force' more
"It certainly is a reminder to everyone that the U.S.is serious about sanctions, and it's doubtful they will grant waivers", said John Kilduff, partner at Again Capital Management in NY.
This week, Brent is expected to average $74.50/Bbl, Ashley Petersen, lead oil market analyst at Stratas Advisors said late Monday. Last week's U.S. EIA crude oil inventories jumped significantly, putting downward pressure on oil prices before finding some support in the latter half of the week.
Prices drew some support from US sanctions against Iran, introduced Tuesday in a range of sectors.
Moreover, amid both economic growth as well as Beijing's mandate that gas make up at least 10 percent of the country's energy mix by 2020 to offset the effects of rampant air pollution from dirtier thermal coal power production, the long term trajectory for both China's natural gas consumption, as well as oil usage, will continue to increase, posing both a geopolitical and financial dilemma for the country that the USA and many western powers grappled with for decades.
"Anyone doing business with Iran will NOT be doing business with the United States", he added. However, they were still among the lowest this year because of a drop-off in demand from the country's smaller independent, so-called "teapot" refineries.More news: Video shows Brooklyn nail salon workers attacking customer
The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning, showing that U.S. commercial crude inventories decreased by 1.4 million barrels last week, maintaining a total U.S. commercial crude inventory of 407.4 million barrels.
In terms of production, the EIA on Tuesday slightly cut its 2018 expectation for average 2018 US crude output to 10.69 million bpd, down from its previous estimate of 10.79 million bpd.
The August total is also likely to be just above the 9.65 million barrels imported over the first seven months, showing the scale of acceleration in India's imports of USA crude. OPEC+ countries will increase production by 1 million barrels per day, of which 200,000 bpd will be provided by Russian Federation.
The mounting trade tension has raised concerns that global economic growth will slow, lowering demand for crude oil in the process.
Much of the northern hemisphere has been gripped by extreme heat this summer, pushing up demand for industrial and residential cooling. In Europe, spot demand for Iranian crude is sharply down, but refiners with term contracts are still honoring them, according to sources who spoke to Platts.More news: Former Manafort partner Gates to testify next in fraud trial
This is unedited, unformatted feed from the Press Trust of India wire.