Oil in London extended losses below $84 a barrel after Saudi Arabia said it can tap its spare production capacity immediately to offset any declines in Iranian crude exports due to American sanctions
Brent fell as much as 1.1 percent, after retreating 2.5 percent in the past two sessions. Saudi Arabia is pumping about 10.7 million barrels a day and can add another 1.3 million, the kingdom’s crown prince said in an interview. Meanwhile, the Trump administration was said to be in talks with countries that want to continue buying Iranian crude after sanctions resume Nov. 4.
Oil has eased after rallying to a four-year high above $86 a barrel in London last week. Still, traders remain concerned the Organization of Petroleum Exporting Countries and its allied producers aren’t raising output quickly enough and that they may not have the capacity to fully cover a decline in exports from the Persian Gulf state.
“OPEC’s spare capacity issue has been the oil markets biggest mystery for some time with most of that debate falling around mega-producer Saudi Arabia,” Stephen Innes, head of Asia Pacific trading at Oanda Corp. said in an emailed note. “The problem is that the capacity is quickly declining due it Asia’s insatiable demand.”