Oil price drops as Iran sanction waivers kick in

All-time high oil production levels among top exporters have kept prices in check despite US sanctions targeting Iran.

2 min read

07 November, 2018

Refineries in Iran pumping oil [Getty]

The price of oil dropped on Wednesday amid high output and sanctions waivers allowing top purchasers to continue buying Iranian oil despite US sanctions.

Brent crude was trading at $71.83 per barrel, down 30 cents from their last close.

JP Morgan said the "sell-off in oil was due to excessive crude" as production levels climb while "Iranian supply was still in the market".

US President Donald Trump pulled out of the landmark 2015 Iran nuclear deal in May, and sanctions targeting the country's oil sector took effect on 4 November.

However, Washington granted waivers to Iran's biggest customers to allow limited imports for 180 days.

President Trump has sought to keep the price of oil down ahead of Tuesday's midterm elections, which saw Democrats retake the House but Republicans retain the Senate.

Twitter Post

Refinitiv data showed Iran's oil exports dropping from three million barrels per day in mid-2018 to about 1 million this month.

However, Iranian exports are expected to rise as sanctions waivers take effect.

In China, about 9 million barrels of Iranian oil are docked outside Dalian port as the country sought to offload as much wares as possible before looming US sanctions.

But because sanctions restrict Iran's access to the US financial system, the country is unlikely to receive direct income and instead used to trade non-sanctioned goods.

Aside from Iran, oil production from Russia, the US and Saudi Arabia - the world's top three producers - is at an all-time high and now accounts for one-third of global consumption.

But oil experts are warning that geopolitical risks could cut into global oil supplies and drive prices up again.

Follow us on Twitter: @The_NewArab