Brent for September settlement advanced 74 cents to $73.69 on the London-based ICE Futures Europe exchange.
Oil companies are planning to make up for the shortfall by increasing purchases from other Middle Eastern suppliers, such as Saudi Arabia, since imports of Iranian crude will likely stop by around October, the sources said. Prices, which had strengthened on news of Saudi Arabia's planned export cuts, fell as the market's focus returned to potential oversupply as Saudi Arabia, Russia and other major producers continue to lift output.
The WTI Crude Oil market had a slightly positive session on Wednesday, getting roughly 1% as I record this.
-China trade war and the specter of mounting supplies from Saudi Arabia, the US and Libya triggered concern about renewed oversupply.
Kansas City Federal Reserve Bank President Esther George said on Tuesday uncertainty over US trade policy could slow the economy, even if recently imposed tariffs are too small to have a big impact.
By 2030, around 6 million bpd of oil supply-mostly yet-to-find, contingent resources and fringe plays in the USA -is expected to break even above $70 per barrel. "For the energy renaissance to continue, the United States natural gas and oil industry critically needs policies that advance energy infrastructure around the country as well as the access of U.S. energy to global markets".
However, the EIA also reported USA oil production reached a record 11 million barrels per day (bpd).
USA crude stocks surprised the market and rose by 5.8 million barrels last week as oil production hit 11 million barrels a day (MMBPD) for the first time ever, the Energy Information Administration said Wednesday.
U.S. President Donald Trump said in a CNBC interview he was ready to put tariffs on $500 billion of imported goods from China.
"The dollar was a one-way ticket for the last couple of weeks and basically reversed directions, giving us some strong support", said Phil Flynn, analyst at Price Futures Group.
Second, Trump can, as he recently did, ask Saudi Arabia to increase its crude production. The gains represent a rapid increase in output, as the data, if confirmed by monthly figures, puts the United States as the second largest producer of crude oil, just behind Russian Federation, which was producing 11.2 million bpd in early July.
The price of United States crude oil is dropping still further as oversupply in the market continues to dominate trading. The U.S. now has only one export terminal that can accommodate 2-million-barrel supertankers preferred by faraway customers in Asia and expansions at other ports aren't expected to be completed before 2020.
Most of the local oil refiners try to avoid importing crude oil from Mexico because it contains a relatively high level of foreign particles such as sulfur, making suitable for producing low-profit products such as bunker fuel only.