US oil prices rise as Gulf oil rigs evacuated ahead of hurricane

British lender Barclays said on Tuesday that oil markets had changed since 2017 when worries about rising supply were more evident. (Reuters)
Updated 04 September 2018
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US oil prices rise as Gulf oil rigs evacuated ahead of hurricane

  • Two Gulf of Mexico oil platforms were evacuated in preparation for a hurricane
  • India allowed state refiners to import Iranian oil if Tehran arranges and insures tankers

SINGAPORE: US oil prices rose on Tuesday, breaking past $70 per barrel, after two Gulf of Mexico oil platforms were evacuated in preparation for a hurricane.
US West Texas Intermediate (WTI) crude futures were at $70.05 per barrel at 0353 GMT, up 25 cents, or 0.4 percent from their last settlement.
Anadarko Petroleum Corp. said on Monday it had evacuated and shut production at two oil platforms in the northern Gulf of Mexico ahead of the approach of Gordon, which is expected to come ashore as a hurricane.
International Brent crude futures, by contrast, lost ground, trading at $78.07 per barrel, down 8 cents from their last close.
This came as India allowed state refiners to import Iranian oil if Tehran arranges and insures tankers.
Many international shippers have stopped loading Iranian oil as US financial sanctions against Tehran prevents them from insuring its cargoes.
Mirroring a step by China, where buyers are shifting nearly all their Iranian oil imports to vessels owned by National Iranian Tanker Co. (NITC), this means that Asia’s two biggest oil importers are making plans to continue Iran purchases despite pressure by Washington to cut orders.
Traders said Brent was also pressured by emerging market turmoil and the strong dollar, which makes crude imports for countries using other currencies more expensive.
Britain’s Barclays bank said on Tuesday that oil markets had changed since 2017 when worries about rising supply were more evident.
“US producers are resisting temptation and exercising capital discipline, OPEC and Russia have convinced market participants they are managing the supply of over half of global production, the US is using sanctions more actively, and several key OPEC producers are at risk of being failed states,” Barclays said.
Crude oil “prices could reach $80 and higher in the short term,” the bank said, although it added that despite these developments global supply may exceed demand next year.
For 2020, Barclays said it expects Brent to average $75 per barrel, up from its previous forecast of just $55 a barrel.
French bank BNP Paribas struck a similar tone, warning of “supply issues” for the rest of the year and into 2019.
“Crude oil export losses from Iran due to US sanctions, production decline in Venezuela and episodic outages in Libya are unlikely to be offset entirely by corresponding rises in OPEC+ production due to market share sensitivities,” the bank said.
BNP Paribas expects Brent to average $79 per barrel in 2019.


Volvo quits Iran as US sanctions pressure mounts

Updated 34 min 5 sec ago
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Volvo quits Iran as US sanctions pressure mounts

  • Volvo cannot get paid in Iran due to US sanctions
  • Plans were for at least 5,000 trucks to be assembled in Iran Saipa Diesel says zero Volvo trucks assembled since May

STOCKHOLM, Sweden: Swedish truck maker AB Volvo has stopped assembling trucks in Iran because US sanctions are preventing it from being paid, a spokesman for the company said on Monday.
The sanctions against Iran, reimposed on Aug. 6 by US President Donald Trump after his decision to pull out of a nuclear deal with Tehran, have forced companies across Europe to reconsider their investments there.
Volvo spokesman Fredrik Ivarsson said the trucks group could no longer get paid for any parts it shipped and had therefore decided not to operate in Iran in another blow to the country’s car industry, which unlike the energy and banking sectors, had managed to sign contracts with top European firms.
“With all these sanctions and everything that the United States put (in place) ... the bank system doesn’t work in Iran. We can’t get paid ... So for now we don’t have any business (in Iran),” Ivarsson told Reuters by telephone.
Before the sanctions were reimposed, Volvo had expressed an ambition for Iran to become its main export hub for the Gulf region and North Africa markets.
The European Union has implemented a law to shield its companies, but the sanctions have deterred banks from doing business with Iranian firms as Washington can cut any that facilitate such transactions off from the US financial system.
Volvo was working with Saipa Diesel, part of Iran’s second-largest automaker SAIPA, which was assembling the Swedish firm’s heavy-duty trucks from kits shipped to Iran.
Ivarsson said Volvo had no active orders in Iran as of Monday.
A commercial department manager at Saipa Diesel confirmed that sanctions had prompted Volvo Trucks to terminate their partnership agreement.
“They have decided that due to the sanction on Iran, from (May) they couldn’t cooperate with us. We had some renovation planned in Iran for a new plant but they refused to work with us,” said the manager, who declined to be identified.
More than 3,500 Volvo trucks had been assembled by Saipa Diesel in the year to May, but none had been assembled in this financial year although the original deal was for at least 5,000 trucks, the manager told Reuters.
Swedish truckmaker Scania, which is owned by Volkswagen , said it had canceled all orders that it could not deliver by mid-August due to sanctions, while French carmaker PSA Group began to suspend its joint venture activities in Iran in June.
Germany’s Daimler has said it is closely monitoring any further developments, while carmaker Volkswagen has rejected a report that suggested it had decided against doing business in Iran.