Oil firm on Iran sanctions, but rising US supply and strong dollar weigh

Traders said prices were held back by a strong dollar which makes oil imports more expensive for countries using other currencies domestically. (Reuters)
Updated 03 October 2018
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Oil firm on Iran sanctions, but rising US supply and strong dollar weigh

  • Global oil markets remained tense because of the looming US sanctions against Iran’s oil exports
  • Fuel consumption is strong, growing especially fast in Asia’s emerging economies

SINGAPORE: Oil prices were firm on Wednesday on expectations of tighter markets once US sanctions target Iran’s petroleum industry from next month, although a strong dollar and rising US crude supply curbed gains.
Brent crude oil futures were at $84.86 per barrel at 0340 GMT, up 6 cents from their last close.
US West Texas Intermediate (WTI) crude futures were up just 1 cent at $75.24 a barrel.
Traders said global oil markets remained tense because of the looming US sanctions against Iran’s oil exports, which kick in from November 4.
Brent and WTI earlier this week both reached levels last seen in November 2014, and the two contracts have risen by around 20 and 17 percent respectively since mid-August.
Despite this, traders said prices were held back by a strong dollar which makes oil imports more expensive for countries using other currencies domestically, as well as by climbing supply in the US.
US commercial crude inventories rose by 907,000 barrels in the week to Sept. 28 to 400.9 million, the private American Petroleum Institute (API) said on Tuesday. Refinery crude runs fell by 158,000 barrels per day (bpd), API data showed.
Official weekly government data is due from the Energy Information Administration on Wednesday.
Traders said the rising stocks were partly due to a relentless increase in US crude oil production, which has jumped by a third since mid-2016 to a record 11.1 million bpd.
“We expect US crude production to exit the year at 11.3 million bpd,” Barclays bank said in a note on Tuesday.
That would mean the United States challenges Russia as the world’s biggest crude oil producer.
On the demand side, fuel consumption is strong, growing especially fast in Asia’s emerging economies.
However, high crude prices, combined with widespread emerging market currency weakness, threaten growth.
“That oil prices are rising to elevated levels at the same time as emerging market currencies hit record lows will be a flashing signal to OPEC members that demand may be at risk of a sharp correction,” said Emirates NBD bank.


Oman oil minister excited to be part of Sri Lanka oil refinery project

Updated 24 March 2019
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Oman oil minister excited to be part of Sri Lanka oil refinery project

  • Sri Lanka originally said Oman’s oil ministry planned to take a 30 percent stake in the refinery
  • The India-based Accord Group is the main investor in the refinery project

HAMBANTOTA, Sri Lanka: Oman’s oil minister said on Sunday he was excited to be part of a Sri Lanka oil refinery project, an indication plans for the sultanate’s involvement may be back on track.
The comments by Mohammed bin Hamad Al-Rumhy came after an Omani official last week had denied the Middle Eastern country had agreed to invest in the project.
Rumhy joined Sri Lankan Prime Minister Ranil Wickremesinghe at the laying of the foundation stone for the planned $3.85 billion oil refinery at Hambantota on the south coast, which would be the island’s biggest foreign direct investment.
Sri Lanka originally said Oman’s oil ministry planned to take a 30 percent stake in the refinery, which will be built near a $1.4 billion port controlled by China Merchants Port Holdings.
The India-based Accord Group is the main investor in the refinery project, through a Singapore entity it controls.
“We have Chinese investment, we have Indian investments, we have Oman interest for investment, and we have investment interest from many other countries,” Wickremesinghe said at the event. “It shows that Hambantota will become the multinational investment zone.”
A senior Sri Lankan minister, who declined to be identified because he is not authorized to talk to the media, said Oman had given a commitment to invest in the refinery and there would not be any turning back.
But on Wednesday, Salim Al-Aufi, the undersecretary of Oman’s oil and gas ministry, said “no one on this side” was aware of the investment.
Sri Lanka’s investment board said last week that another Oman entity, Oman Trading International, was willing to supply all of the refinery’s feedstock needs and take on the marketing of the oil products it would produce.
Sri Lanka, India and China have been vying for political influence in Sri Lanka in recent years, with investment a key part of the battleground.
China is the biggest buyer of Omani oil. In January it imported about 80 percent of Oman’s crude exports, Oman government data shows.
An investment zone is planned by China Harbor Engineering Corp. alongside the port.