The United States exported about 5.1 million barrels per day (bpd) of products through the second quarter, according to data from the U.S. Energy Information Administration.
So, they continue to import oil just as before. Take, for instance, the surge in USA shale-oil production due to the innovative use of hydraulic fracturing combined with horizontal drilling, which has been a big upshot for US oil production. The US has threatened to sanction "everybody, including China" if they purchase Iranian oil once sanctions step into effect. The country expects exports to drop by roughly 100,000 barrels per day in August as it works to ensure it does not push oil into the market beyond customers' needs, the kingdom's Organization of the Petroleum Exporting Countries Governor Adeeb Al-Aama said. Saudi Arabia claims that it has 2mbpd of excess capacity - not enough to plug a major hole in the world oil market.
Still, overnight oil is weak as the US dollar soars and other commodities get crushed. Considering the fact that Iraq, the other potential oil supplier that can substitute Iranian oil, represents a more volatile and risky choice.
Crude pushed higher after Saudi Arabia pledged not to flood world markets with oil. Among Korean oil refiners, SK Energy Co. and Hyundai Oilbank Co. import crude oil from Iran. Motor fuel demand also rose from the week before and was up from a year earlier. India, vulnerable to USA pressure, has said that it would only buy Iranian oil if it is able to get a waiver against sanctions from the US government. Saudi Arabia's oil production jumped in June by 405,400 bpd compared to May, to reach 10.420 million bpd.
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Meanwhile, OPEC and non-OPEC's compliance with oil output curbs declined to around 120 per cent in June from 147 per cent in May, two sources familiar with the matter told Reuters on Wednesday.
Oil prices plunged after OPEC member Libya reopened its ports in the east and US Secretary of State Mike Pompeo said Washington would consider granting waivers to some of Iran's crude buyers. Saudi Arabia also said that OPEC+ would no longer focus on country-specific output limits but instead would heed a collective target, a switch that would free Saudi Arabia to ramp up production.
Crude has retreated by about 6 per cent this month as the prospect of a tit-for-tat trade war between the USA and China rattled global financial markets.
A month ago, the investment bank kept its forecast that Brent Crude would hit $82.50 a barrel this summer and would end 2018 at $75 per barrel, citing strong demand growth and further supply losses pointing to continued declines in inventories and higher oil prices for the rest of the year. If these trends continue, the price of United States crude could yet fall further.