- Oil prices saw declines on Monday following a development on the impending U.S. sanctions on Iran in November.
- Last Friday, a U.S. government official said the country could potentially grant waivers to the sanctions for nations which already showed efforts to reduce their imports of Iranian oil.
Oil prices fell on Monday after a U.S. government official said Washington was considering granting waivers to its sanctions against Iran’s crude exports next month, and as Saudi Arabia was said to be replacing any potential shortfall from Iran.
International benchmark Brent crude oil futures were at $83.53 per barrel at 0028 GMT, down 63 cents, or 0.75 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were down 39 cents, or 0.5 percent, at $73.95 a barrel.
U.S. sanctions will target Iran’s crude oil exports from Nov. 4, and Washington has been putting pressure on governments and companies worldwide to cut their imports to zero.
However, a U.S. government official said on Friday that the country could consider exemptions for nations that have already shown efforts to reduce their imports of Iranian oil.
Further weighing on prices. Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore, said there was also “chatter that Saudi Arabia has replaced all of Iran’s lost oil”.
But Innes warned that limited spare production to deal with further supply disruptions meant “the capacity is quickly declining due it Asia’s insatiable demand”.
The U.S. oil drilling rig count fell for a third consecutive week, as rising costs and pipeline bottlenecks have hindered new drilling since June.
Drillers cut two oil rigs in the week to Oct. 5, bringing the total count down to 861, energy services firm Baker Hughes said in its weekly report on Friday.
That is the longest streak of weekly cuts since October last year.
With Iran sanctions still on the table, potential spare capacity constraints and also a slowdown in U.S. drilling, U.S. bank J.P.Morgan said in its latest cross-asset outlook for clients that it recommended to “stay long Jan ’19 WTI on supply risks to crude”.