Crude prices remain volatile on mixed developments

US considers sanction waivers on countries reducing imports of Iranian oil

The revelation that Russian Federation worked privately with the Saudis "on Trump's order" to aid the US effort to halt Iranian oil exports without causing a supply shock seems to contradict Russia's public promise to defend Iran's economy against aggressive USA sanctions.

"The recent increase in prices has gone too far, in our view", Barclays said in a note.

The Saudi prince contended in the Bloomberg interview that the most recent sharp rise in prices to over $80 a barrel is actually being driven by output losses in other countries, not Iran.

Brent crude was up 40 cents to $85.20 a barrel at 4:51pm (Oct 3) in London.

Worldwide benchmark Brent crude oil futures were at $85.05 per barrel at 0653 GMT, up 47 cents, or 0.6 percent from their last close. However, Russia, which rivals the Saudis as a top global producer, does not support the USA sanctions against Iran and has vowed to help Iran get around them and keep exporting oil. It had planned to import 9 million tons of Iranian oil in the 2018-19 fiscal (April 2018 to March 2019) or 0.75 million tons a month.

"This is one of the single biggest supportive factors for crude", said analysts at JBC Energy of the U.S.re-imposition of Iran sanctions. "The tightness of oil supply means that prices are particularly susceptible to shocks, and implies that risks are firmly to the upside", said World Bank economist Cesar Calderon.

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Iran's key oil customers are opting for more medium sour crudes from Saudi Arabia, Iraq, Russia and UAE, which is causing prices of these grades to soar and putting pressure on global refinery margins.

That is the longest streak of weekly cuts since October a year ago. Other investors are betting on the continued rise in prices expecting nearly 1.2 Billion barrels of oil.

Meanwhile, the US Energy Information Administration (EIA) reported a huge increase in weekly crude oil inventories.

Since January 2016, when the crude oil price hit an all-time low of $28.06 per barrel, the Kenyan economy has been cushioned from external shocks through a smaller petroleum products import bill, which stood at $560 million mid previous year. "I anticipate that November will be slightly higher", he said, potentially breaking the production record set in November 2016. The kingdom is willing to tap all of its spare capacity, Mr Al-Falih said.

The early price action indicates that the weaker longs believe this weekend's news enough to reduce positions and book a little profit.

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