Nov. 1 (UPI) — Crude oil futures continued to show weakness Thursday morning as reports of higher production by the world’s biggest producers reduced the potential impact of U.S.-nuclear related sanctions against Iran, an analyst said.
WTI front-month crude oil prices were down 0.2 percent as of 9:42 a.m. EST to $65.20 per barrel, while Brent front-month futures were down 0.4 percent to $74.71 per barrel.
“Oil nevertheless trades lower, with WTI testing $65 while Brent has broken below the important $75 level to challenge the 200-day moving average at $74 per barrel,” Ole Hanson, head of commodity strategy at Saxo Bank, told UPI.
Reports of production increases by the biggest producers of oil, including the United States, as well as Saudi Arabia and Russia, have helped to decrease concern about potential supply disruption once U.S.-nuclear related sanctions against Iran go into effect by Nov. 5.
Uncertainty related to how much of Iran’s production of 3.8 million barrels per day, as of April 2018, would be unable to reach the markets had caused increases in crude oil prices.
As of the latest OPEC-issued data, production in Iran was likely down to 3.4 million barrels in September. It remains to be seen how much it may decrease after the sanctions go into effect.
The U.S. Energy Information Administration estimated on October 24 that Iran may be able to continue production of as much as 2.8 million barrels per day, even after sanctions go into effect, based on what happened in 2012 after the country faced a similar situation. Companies in some countries may also defy the sanctions and channel payments in a way that it avoids the U.S. financial system.
Hansen said talk of U.S. waivers from the sanctions potentially being granted to India and South Korea may also reduce the ability of the sanction to impact Iran’s ability to produce and export crude oil.
“These developments have further reduced the potential impact of US sanctions against Iran when they come into force next week,” Hansen added. “WTI crude is now looking for support ahead of $64 per barrel, with a break below carrying the risk of an even deeper correction than the one already witnessed.”
On Oct. 3, Brent crude futures traded as high as $86.29 per barrel amid widespread concern about the impact of U.S. sanctions against Iran, as well as possible supply disruptions in Venezuela, where the government is undergoing economic and political turmoil.