Oil prices were stable on Monday, weighed down by rising supply from OPEC and the United States but supported by concerns that falling Iranian output will tighten markets once USA sanctions bite from November.
Edward Bell, analyst at Emirates NBD bank in Dubai, agreed: "Iranian production is already showing signs of decline, falling by 150,000 Bpd last month ..."
"All of Iran's oil customers are affected by increasing USA pressure to halt purchases, even as they request for concessions to cope with the consequences", said Den Syahril, a senior analyst at industry consultant FGE.
The economists added that in order to survive, Iran should "ensure that the remaining key trading partners will continue buying its oil and not bow to U.S. demands".
What's noteworthy about OPEC's August performance is that while production from the cartel's de facto leader Saudi Arabia edged up 10.48 million bpd, this was still intentionally lower than the kingdom's 10.60 million bpd showing for June - suggesting that if the Saudis made a decision to put aside worries about flooding the market and pump full out, OPEC could arguably put to rest persistent criticism that it isn't able to make up for shortfalls from Iran or Venezuela.
But global oil markets are still fairly well supplied.
Indian state refiners, which drove India's July imports of Iranian oil to a record 768,000 barrels per day, had planned to almost double oil imports from Iran in 2018/19.More news: David Beckham's MLS team unveils name and crest
BNP Paribas says, "Crude oil export losses from Iran due to US sanctions, production decline in Venezuela and episodic outages in Libya are unlikely to be offset entirely by corresponding rises in OPEC production". Additionally, Iraq's exports to the south hit record highs. It is due to this high count of oil rigs that the USA has been able to maintain such high production rates.
The 9.6% rise lifted Japan's import volumes of Iranian cargoes to 183,560 b/d in July despite the country's overall crude imports dropping 12.8% year on year to 2.92 million b/d in the month, preliminary data from the Ministry of Economy, Trade and Industry released Friday showed.
The ongoing trade wars between the U.S. and some of the world's biggest economies, including the European Union and China, could hurt the demand for oil if they aren't settled soon.
But these factors alone are not enough to create a sustainable oil rally, especially with the escalating trade war between China and the USA threatening demand and the dollar set to strengthen in September.
"It isn't at all clear that such type of economic headwinds will topple oil prices given ... the constant barrage of supply outages", Innes said.