U.S. West Texas Intermediate crude futures finished Friday's session down 47 cents at $68.49 per barrel, Kallanish Energy reports.
Key OPEC oil producers seem to be finding it harder than expected to sell their output overseas with resulting build-up in their stockpiles potentially helping them offset the drop in Iranian supplies, as US sanctions start to bite deeper, Bloomberg reported.
In June, the USA state department said that countries buying oil from Iran should bring down to zero their Iranian crude imports by the time Washington re-imposes sanctions on November 4. Brent crude futures fell 31 cents, to $73.14/Bbl at 2:25 p.m. ET.
That drop came despite a pledge by the Saudis and top producer Russian Federation in June to raise output from July, with Saudi Arabia pledging a "measurable" supply boost.
Chinese and Indian companies "will be subject to the same sanctions that everybody else's are if they engage in those sectors of the economy that are sanctionable", a State Department official told reporters in June.
Saudi Arabia produced much less oil per day than expected, especially considering OPEC was supposed to be lifting barrel counts. This is causing investors to continue to trim net length, take profits as well as de-risk that position with the sense that oil's upside is limited unless there is material reduction in Iranian barrels. Inventories rose for the first time in seven months in May.
China imports more Iranian oil than any other country.
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SPA quoted Energy Minister Khalid al-Falih as saying: "The decision to resume shipping of oil through Bab al-Mandeb comes after all necessary procedures were taken by the coalition leadership to protect ships of the coalition countries".
Fears that Chinese demand could taper fuelled the pullback on Friday after state oil major Sinopec cut its purchases of USA crude.
The strain between China and the US derive from a similar attack by Trump, who levied a global tariff on steel and aluminum imports in March.
Earlier this year, Unipec had planned to trade up to 300,000 bpd of US crude oil by the end of 2018, which would have been triple the volume of USA crude oil that it traded last year, according to OilPrice.com. China's Unipec, the trading arm of Sinopec, has suspended crude oil imports from the United States.
China's stand of rejecting U.S.' demand is a blow to President Donald Trump's efforts to isolate the Islamic Republic after his withdrawal from the 2015 nuclear accord.
The official confirmed that during July delegations would be dispatched to Beijing and Delhi to press home the case, having already visited the capitals of other major Iranian oil importers.