Oil prices dip as demand outlook dims; Iran sanctions provide some support

So what would the loss of Iranian oil exports look like

Global benchmark Brent crude traded at around $72.80 on Friday morning, little changed from the previous session, while U.S. West Texas Intermediate (WTI) stood at $67.43, down around 0.3 percent. Yet, bullish sentiment found some support from expectations that looming USA sanctions against Iran could significantly hamper its crude exports.

Brent crude futures fell $1.67, or 2.3 per cent, to $71.14 a barrel, by 12:29 p.m. EDT.

Oil prices steadied on Monday as trade tensions and troubled emerging markets dented the outlook for fuel demand, though USA sanctions against Iran pointed towards tighter supply ahead.

Turkey's financial crisis has raised the risk of contagion throughout emerging economies, dragging down South Africa's rand, Argentina and Mexico's pesos and the Russian rouble.

News agency Bloomberg reported on Friday that the state-run National Iranian Oil Company was reducing official prices for September sales to Asia to their lowest level in 14 years, compared with Saudi crude. Riyadh told Washington in June it would increase output in attempt to make up for Iranian barrels taken off the market by U.S. sanctions.

OPEC expects oil supply by countries outside the cartel to increase by 2.13 million bpd next year, 30,000 bpd more than forecast last month, with much of the increase coming from new USA shale production.

Georgi Slavov, of commodities trader Marex Spectron, said demand from oil refineries is expected to fall as profit margins tighten and the global economy appears to be producing the same output with less energy input.

US energy companies last week increased their number of active oil rigs by the most since May, adding 10 rigs to bring the total count to 869, according to the Baker Hughes energy services firm.

But demand for crude may not climb by as much as previously thought, raising concerns that the market may slip into over-supply once again.

OPEC's output averaged 32.32 million barrels per day in July, up 41,000bpd from June, the group said in its monthly oil market report, citing secondary source figures.

Economists, analysts, and investment banks haven't fundamentally altered their assumptions for global economic growth and oil demand growth, but they all warn that trade disputes are adding yet another-quite bearish-wild card to watch for in oil price trends.

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