India defies US, buying Iranian oil despite sanctions

India defies US, buying Iranian oil despite sanctions

Global benchmark Brent crude oil futures LCOc1 were at $83.26 per barrel at 0352 GMT, down 90 cents, or 1.1 percent, from their last close.

On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 1.20% at $73.45 a barrel.

The country's largest privately owned crude terminal, the Louisiana Offshore Oil Port LLC, said late on Tuesday it had halted operations at its marine terminal.

Secretary of State Mike Pompeo said on a visit to India in September that some waivers from the sanctions might be granted to countries buying Iranian oil, but only if they agreed to cut their imports to zero.

Some energy market analysts expect around 500,000 barrels per day (bpd) to disappear once USA sanctions against Iran come into force, while others have warned as much as 2 million bpd could come offline over the coming months.

In May, before U.S. President Donald Trump announced that he was reinstating sanctions against Tehran, the International Monetary Fund had projected Iran's economy would grow by 4 percent in 2018 and 2019.

Hedge funds cut their bullish wagers on US crude in the latest week to the lowest level in almost a year, data showed on Friday.

The primary market driver, however, is a report which showed Iran's crude exports fell further in the first week of October, according to taker data and an industry source. Even in the case of Iran there is an expectation that its oil exports may fall less sharply than feared, while Libya's oil production has stated to rise. China is reportedly reducing its oil imports from Iran, though it's not likely to fully comply with the us demands.

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As reported, Indian Oil Corp will lift six million barrels of Iranian oil while Mangalore Refinery and Petrochemicals Ltd ships in three million barrels.

That is down from at least 2.5 million bpd in April, before U.S. President Donald Trump in May withdrew the United States from a 2015 nuclear deal with Iran and re-imposed sanctions.

India had thus far not publicly articulated its stand on the issue, but with the advance orders placed for November, has made it clear that India will not "zero out" its oil intake from Iran.

Oil prices have extended a rally on expectations the sanctions will test the Organization of the Petroleum Exporting Countries and other producers.

Saudi Arabia said last week it plans to raise production in November from October output of 10.7 million barrels per day (bpd), indicating Riyadh will be boosting its supply to the highest ever level.

This theory will be tested this week with the shutdown of 19 percent of oil production in the Gulf of Mexico due to rapidly approaching Hurricane Michael.

If current forecasts prove accurate, the hurricane would largely miss major producing assets in the Gulf, analysts said, but any change of track could widen the impact.

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