South Korea denies stopping Iran's oil imports

Oil Prices Up on Weak US Crude Inventory

Oil Prices Up on Weak US Crude Inventory

Even if the U.S. government grants some waivers to allies, FGE estimated 1.7-million to 2-million barrels a day of crude and condensate would be cut out of markets once its sanctions were implemented.

It is now trying to negotiate a waiver from the US sanctions, but judging by the State Department's stated goal to reduce Iran's crude oil exports to zero, success is uncertain.

The U.S. rig count, an early indicator of future output, is much higher than a year ago as energy companies have ramped up production in response to higher prices.

An increase in supply will reverse some of the output cuts that OPEC and other major producers put in place in early 2017 to end several years of supply glut.

Oil markets opened cautiously lower on Friday ahead of a raft of import tariffs set to be imposed later in the day by the world's two biggest economies, the United States and China.

It should also be noted that for the week, WTI was on track for a loss of about 0.4 percent while Brent was down about 3 percent.

Oil was mixed last week as a Canadian supply outage supported United States crude prices, while an increase in production from Opec's biggest exporter Saudi Arabia pushed Brent lower.

But by 5.28am GMT, US West Texas Intermediate (WTI) crude futures were up 13c or 0.2% from their last settlement at $$73.07 a barrel.

USA crude inventories rose by 1.2 million barrels in the week ending June 29, the Energy Information Administration said on Thursday, much higher than analysts' expectations for a decrease of 3.5 million barrels.

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As part of the retaliatory response, Beijing has threatened a 25% tariff on USA crude imports, although it has not specified an introduction date.

"Indian refiners can't absorb all the USA oil that was going to China".

"Things will get worse before they get better on trade... between the USA and China", said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

The rally appears to be a "short covering situation - we were down nearly 2% yesterday", said Yawger, Reuters reported.

An executive from China's Dongming Petrochemical Group said he expected Beijing to soon impose the tariff on USA oil imports.

The tightness at Cushing and the potential increase in Gulf exports "both have implications for how quickly the prompt overhang in the market can clear, and thus provide some direction for prices", Chauhan said.

Energy consultancy FGE this week issued a stark warning of looming supply shortages due to US sanctions against Iran and also because of disruptions elsewhere.

Two other sources said South Korea cancelled July loadings of crude and condensate cargoes from Iran as it was uncertain whether the country would receive an exemption from United States sanctions on Iran trade.

Top exporter Saudi Arabia told OPEC it raised oil output by nearly 500,000 barrels per day last month, OPEC sources said, a sign Riyadh wants to make up for shortages elsewhere and dampen prices.

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