"In theory, we could have been in a bullish market because of sanctions against Iran".
Goldman Sachs said it expects Iran's crude exports to fall to 1.15 million bpd by the end of the year.
The determination is needed under USA law for Washington to impose sanctions on foreign countries that fail to significantly reduce their purchases of Iranian oil and petroleum products.
That's significantly lower than the peak of 2.7 million bpd in June this year, but still stubbornly high compared to some analyst estimates that the predicted sanctions could possibly choke off close to 2 million bpd of Iran's oil exports.
The Schork Report Publisher Stephen Schork on the outlook for oil.
Russian Federation is said to raise oil and condensate production to a record high in October just as the US signaled some countries may continue importing Iranian crude after sanctions take effect.
The sources said New Delhi and Washington "have broadly agreed on a waiver", detailing that "India will cut import by a third, which is a significant cut".
A waiver will come as a big relief to Indian Oil and MRPL, the two largest Iranian oil consumers. The companies will be allowed to import 1.25 million tons a month up to March 2019, the same as they ordered for October and November. State oil firms are yet to decide on how this quantum will be split between them. "And the sanctions that are reimposed on November 5 will target critical sectors of Iran's economy, such as energy, shipping and the ship-building sectors, as well as the provision of insurance and transactions involving the Central Bank of Iran and designated Iranian financial institutions". Iran could mix its oil with crude from neighboring Iraq, sell on the black market or try a barter system supported by the Europeans.
With an over 30% reduction in imports of oil from Iran in the past few months, India is hoping to be eligible for a waiver on Iran oil sanctions from this weekend. Iran used the funds to buy goods from India. "Even if it's temporary, concerns over a supply glut are weighing on prices as Saudi Arabia, Russia and the USA all increase production".
Refineries using Iranian oil have also faced insurance issues during renewals in recent months. During the previous round of sanctions, nations were expected to cut imports by about 20 percent during each 180-day review period to get another exemption.
India prefers Iranian oil as it comes cheap and suits many refineries' technical configuration.