Oil prices have dropped as Saudi Arabia committed to play a ‘responsible role’ in ensuring sufficient supply globally, amidst tensions over looming US sanctions on Iran’s oil exports.
Front-month Brent crude oil futures declined at 50 cents to touch at $79.33 a barrel, while US West Texas Intermediate (WTI) crude futures dropped by 22 cents to reach $69.14 a barrel.
US sanctions on Iran’s crude exports will commence on 4 November and has been struggling, adding pressure on countries to cut their oil imports from Tehran.
South Korea’s crude oil imports from Tehran dropped to zero in September from 2017, according to data from state-owned Korea National Oil Corp (KNOC).
As a leading oil producer, Saudi Arabia has been committed to keeping markets sufficiently supplied, although it is being increasingly isolated over the death of journalist Jamal Khashoggi.
There are also chances that Saudi Arabia could reduce crude supply as a retaliatory measure to potential sanctions against it over Khashoggi’s death.
Dismissing the concerns, Saudi Energy Minister Khalid al-Falih said that ‘there is no intention’ for such action, and that the country would play a ‘constructive and responsible role’.
Economist Intelligence Unit lead energy analyst Peter Kiernan was quoted by Reuters as saying that if Saudi reduces the oil supply, it would lose market share and its reputation as a stable player.
According to Trifecta energy consultancy Sukrit Vijayakar, the US sanctions ‘could impact up to 1.5 million barrels per day of supply’.
Meanwhile, crude oil production in the US has jumped by a third since mid-2016 to reach around 11 million barrels a day and growing drilling activity indicates to further increases.