Iran still 'very important' as United States sanctions loom, says OPEC chief

Iran still 'very important' as United States sanctions loom, says OPEC chief

An adviser to Iran's oil minister said on Tuesday that expected US sanctions on Iran's energy sector could not reduce the country's oil sale to zero because of high demand levels in the market, state TV reported.

Brent crude futures LCOc1 were down 9 cents at $78.92 per barrel 0334 GMT, after rising 1.3 percent in the previous session. The focus on oil supply has been reflected in the options market this week, where investors have scooped up large amounts of bullish buy, or call, options.

USA sanctions affecting Iran's oil exports come into force on November 4 and many buyers have already scaled back Iranian purchases.

United States crude futures were down 6 cents at $69.79, after gaining 1.4 per cent the day before.

OPEC and non-OPEC compliance with the Vienna Agreement production ceiling slipped to 97 percent in July as large producers relaxed output constraints amid falling production in crisis-hit Venezuela and expectations that Iran may be prevented from exporting oil to large parts of the globe.

The OPEC Chief did not specify how crude producers would compensate for declining exports from Iran, with new U.S. sanctions due to hit the Islamic republic's oil industry on November the 4th.

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A pump jack operates at sunset in an oil field in Midland, Texas U.S. August 22, 2018.

"(Traders took the Saudi comments) as a sign that they (Saudi Arabia) won't be aggressively responding to the rise in prices with supply increases of its own", ANZ bank said in a note on Wednesday.

Saudi officials were careful to avoid pinpointing a price target in their conversations, saying that while the kingdom has no desire to push prices higher than $80 a barrel, it may no longer be possible to avoid it. Earlier this month, Saudi shipments into the US reached a four-week average of 1 million barrels a day for the first time since late 2017, according to government data. In the first two weeks of September, it sold an average of 1.6 million barrels a day, down from 2.5 million barrels a day in April, according to Bloomberg tanker tracking.

OPEC members received approximately US$567 billion in net oil export revenues in 2017, up 29% from revenues in 2016, according to the US Energy Information Administration (EIA).

"Overnight chatter suggests that the Saudis are more than happy with a Brent price above $80 or that OPEC, more generally, is not considering raising output".

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