Oil Drops on Sanction Reconsiderations
Oil prices declined on Monday morning after Washington weighed the possibility of waiving some of the sanctions it plans to bring upon Iran next month. Though the original plan was to bring Iranian oil exports to zero, a Washington official announced on Friday that the U.S. would consider sanction exemptions for countries that have already reduced their imports of Iranian oil. India has already confirmed that it will be purchasing 9 million barrels of Iranian crude in November, a sign that Iranian exports won’t hit zero in November as Washington had hoped.
Brent crude futures were down 1.06 percent as of 1:51 p.m. HK/SIN on Monday, to trade at $83.27 per barrel. U.S. WTI futures were down 0.79 percent to $7375 per barrel.
The goal of the proposed sanctions is not only to hurt Iran’s economy, but to prompt political changes within the Iranian regime. Simply put, Iran is likely to be open to negotiating with the U.S. only if it’s in dire straits. Some analysts still consider this situation a long way off as Iran will first look for support from its allies in an effort to remain financially stable and to avoid negotiating with the U.S.
Saudi Arabia has expressed its willingness to replace all of Iran’s oil in the global marketplace, a move which would keep oil prices lower, rather than tightening supply and pricing. Also pressuring oil prices is continuing production cuts in the U.S. where the oil drilling rig count dropped for the third consecutive week last week due to pipeline constraints and rising production costs. According to a report out from Baker Hughes on Friday, the total count declined to 861.