Global oil demand to top 100 mln bpd but outlook may cloud

Oil Prices Climb Ahead of US Sanctions on Iran

Oil prices eased on Wednesday, having neared its highest level this year after a drop in USA crude inventories and the prospect of the loss of Iranian supply added to concerns over the delicate balance between consumption and production.

Futures in NY dropped as much as 1.8 percent after closing at the highest in nearly two months.

Benchmark Brent crude oil was down 65 cents a barrel at $79.09 by 1200 GMT. Brent crude, the global benchmark, fell $1.56, or 2%, to $78.18 a barrel to end a four-session winning streak.

Gordon Gray, HSBC's global head of oil and gas equity research, said there were "real risks" that Brent could hit $100 a barrel.

The US has stepped up pressure on buyers to halt Iranian energy imports from November.

Crude oil also surpassed hydrocarbon gas liquids (HGLs) to become the largest US petroleum export product, with 1.8 million b/d of exports during the same period.

Demand for oil grew more slowly in the second quarter, particularly in Europe and Asia but also because of higher gasoline prices in the USA, the energy group said.

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In its monthly report, OPEC said world oil demand next year would rise by 1.41 million barrels per day (bpd), 20,000 bpd less than last month and the second consecutive reduction in the forecast. Each of those countries usually imports between 500 to 700,000 barrels of Iranian oil per month, a number which may be reduced even though they aren't expected to completely cut ties with Iran.

Iranian crude exports have fallen significantly before USA sanctions even take effect, the IEA said in a monthly report.

Outside the United States, traders have been focusing on the impact of looming USA sanctions against Iran, which will target oil exports from November.

Despite fear of disruptions to global oil supplies and curbs on production, OPEC sees global oil supplies as sufficient - it's demand people should be worrying about. Speculation is swirling over whether a potential supply gap can be filled by the group at a time when American crude inventories are falling to the lowest since 2015, and output losses are witnessed in Iran.

"If Venezuelan and Iranian exports do continue to fall, markets could tighten and oil prices could rise without offsetting production increases from elsewhere", the IEA warned.

While US policy on sanctions against Iran has helped to support the oil price in recent weeks, its trade wars with China and Turkey are competing as a downward drag on the market.

The storm is expected to make landfall on the U.S. East Coast on Friday, and has caused fuel shortages as millions of households and businesses have evacuated.

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