Iran offers discount oil to Asian customers

Saudi Arabia reins in oil production as demand forecasts waver

Saudi Arabia reins in oil production as demand forecasts waver

The turmoil has caused the dollar to hit a 13-month high against the Euro and is causing pressure on gold which saw speculators pile into the short side for an 8th week in a row.

"With U.S. sanctions on Iran back in place all eyes have been on the impact on crude oil exports from that country", ANZ bank said yesterday.

"There are lots of variables in the oil market, the most important of which is Iran", said Tamas Varga, analyst at London brokerage PVM Oil Associates.

Iran's state news agency IRNA reported that an "informed source" inside the country's oil ministry did not provide extensive details and sought to downplay the move as common industry practice.

Meanwhile, investors were watching the impact of US sanctions on Tehran, which analysts say could remove as much as 1 million bpd of Iranian crude from the market by next year.

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How the market is going to make up that 1 million barrels is unclear.

Crude slid as economic turbulence in Turkey and the strengthening greenback heightened concerns about global oil demand.

Though topsy-turvy ride in crude prices is expected to continue, but overall they are likely to trade below the crucial resistance of $73 per barrel and Rs.4950 per barrel level and seem primed to tread lower.

Oil prices decreased on Monday as data showed that inventories at a major USA crude delivery hub rose last week.

Pierre Andurand, who runs the $1.2-billion Andurand Commodities Fund and predicted the rise and subsequent crash in the oil price in 2008, responded on Twitter by pointing out Opec's spare capacity was at its lowest ever.

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In another worrying sign, USA energy companies added the most oil rigs since May last week, pointing to indications of US output growth.

Chinese oil importers now appear to be shying away from buying US crude oil as they fear Beijing may decide to add the commodity to its tariff list.

Analysts believe a disruption to Iranian supplies of around 2.4 million bpd could deal a major blow to the market depending on how much the shipments would be affected. HPCL has also declared that it will not buy crude oil from Iran starting from the month of August. "You can not order 2 million barrels like ordering a coffee somewhere", Beat Wittmann, a partner at financial consultancy Porta Advisors, told CNBC last month. We look for oil to consolidate, setting the stage for a last quarter rally.

Tom Kloza, co-founder of the Oil Price Information Service, told CNBC's " Futures Now " this week that oil prices have been so volatile that a slump to $50, or even a spike above $100 could not be completely ruled out.

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