SINGAPORE (Reuters) – Brent crude prices fell more than 1 percent on Monday after Washington imposed sanctions on Iran's oil exports next month. Saudi Arabia should replace the potential losses from Iran.
FILE PHOTO: Pump winches operate in front of an oil rig in an oil field in Midland, Texas. August 22, 2018. Picture taken on August 22, 2018. REUTERS / Nick Oxford / File Photo
The Brent Crude Oil Futures LCOc1 international benchmark stood at $ 83.25 a barrel at 0115 GMT, down 91 cents, or 1.1 percent, from last close.
West Texas Intermediate (WTI) Crude Oil CLc1 fell 57 cents, or 0.8 percent, to $ 73.77 a barrel.
US sanctions will target Iran's crude oil exports from 4 November and Washington is putting pressure on governments and companies worldwide to reduce their imports to zero.
However, a US official said Friday that the country could consider exceptions for nations that have already made efforts to reduce their imports of Iranian oil.
Hedge funds have reduced their US crude oil bulletins to their lowest level in nearly a year, the data showed on Friday.
Further, the price weakens, said Stephen Innes, head of trade for Asia Pacific futures brokerage Oanda in Singapore, there was also "chatter that Saudi Arabia has lost all Iranian oil".
However, Innes warned that the limited production of spare parts for further supply disruptions would "quickly reduce capacity due to insatiable demand in Asia."
The US oil rig count fell for the third consecutive week as rising costs and pipeline bottlenecks hampered new drilling since June.
In the week before 5 October, drilling machines cut through two oil rigs and lowered the total to 861, energy service provider Baker Hughes said in his weekly report on Friday. RIG-OL-US BHI
This is the longest episode of weekly cuts since last October.
With Iran's sanctions still in place, potential capacity constraints, and a slowdown in US drilling, US Bank JPMorgan said in its latest outlook for customers that they would long stick to the risk of delivering crude oil. "
(Graphic: US-Bohrinselzählung – tmsnrt.rs/2OJ4k8l)
Reporting by Henning Gloystein; Arrangement by Joseph Radford and Richard Pullin