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Iran sanctions waivers, economic slowdown concerns weigh oil prices Tuesday

Iran sanctions waivers, economic slowdown concerns weigh oil prices Tuesday

Mubasher: Oil prices dropped early on Tuesday, pressured by Washington’s allowance to eight countries, including South Korea, Japan and India, to keep importing Iran’s crude oil, along with concerns that an economic slowdown may undermine fuel demand growth.

Analysts said projections of an economic slowdown in next months were weighing on the fuel demand outlook, while supply worries eased after the US granted eight importers of Iranian oil sanctions waivers that will allow them to continue their crude imports from Iran, the Organization of Petroleum Exporting Countries’ (OPEC) third-largest producer.

The US administration has given 150-day exemptions to Iran’s biggest buyers, namely China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey. This implies that the oil-rich Persian Gulf country will be allowed to still export some oil for now.

“Sanctions on Iran have been ... priced into the oil markets”, Jameel Ahmad, head of market research at futures brokerage FXTM, told Reuters.

Ahmad added that he would “instead focus more heavily on the global demand outlook because of the ongoing external uncertainties weighing down on economic prospects.”

He said that there is a slowdown in economic and fuel demand growth as “more of a risk for oil over the coming months.”

Currency weakness is putting a further pressure on major growth economies in Asia, including India, the country with the fastest-growing appetite for energy, and Indonesia, the London-based news agency said.

In the same vein, the trade war between the US and China, the world’s two largest economies, is threatening growth in the two nations.

As for oil supplies, oil is “in ample availability” in spite of the sanctions against Tehran as output from Russia, the US, and OPEC de-facto leader Saudi Arabia, is on the rise.

The combined production of the world’s top-three producers reached as much as 33 million barrels per day (bpd) for the first time in October, meeting as much as a third of the world’s almost 100 million bpd of crude oil consumption.

By 7:06 am GMT, US Nymex crude futures fell 0.33% to $62.89 per barrel (pb), while global benchmark Brent futures went down 0.56% to $72.76 pb.