Oil prices drop due to higher supply, Russian Federation

Prepare for $90 oil after sanctions against Iran take effect – analyst

Front-month Brent crude oil futures was down $2.52, 3.4 percent, at $72.13 a barrel by 11:51 a.m. ET (1551 GMT).

"There is room for [prices in] the crude market to soften a bit more", says John Woods of JJ Woods Associates, adding that inventories could rise further as refineries head toward maintenance season after the summer driving season. Financial markets settled down Wednesday following the previous day's big moves when an easing of concerns over an imminent US -led military strike on Syria sent stocks sharply higher and oil prices down. That figure is roughly equivalent to 3 percent of the world's oil demand.

"The re-imposition of USA sanctions on Iran remains the key (price) driver in the near-term".

It noted that Iran's oil exports fell last month as several European countries reduced purchases and South Korea cut them completely.

"Past instances of El Niño have resulted in sharp drops in US residential and commercial heating oil demand and prices", it said.

On top of that, Iranian President Hassan Rouhani has threatened to disrupt regional oil production and exports if the Trump administration follows through with oil sanctions.

Oil prices slid nearly 4 percent on Wednesday as a trade dispute between the United States and China escalated further and after Chinese import data showed a slowdown in energy demand.

Indian Oil agreed to buy 6 million barrels of US crude through the term-tender, taking its American crude purchases to 16 million barrels in total since April.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $69.15 per barrel, down 2 cents.

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Japanese officials visited Washington last week seeking an early exemption to continue to buy Iranian crude but US officials have refused to comment on the talks.

"The market is supported by concerns the sanctions on Iran are going to reduce Iranian supply", said Tony Nunan, oil risk manager at Mitsubishi in Tokyo.

Oil prices kept rising on Tuesday as traders continued to assess the impacts of the United States' sanctions against Iran, Xinhua reported.

Week over week, USA crude oil exports rose by 540,000 barrels a day, and US production dipped by 100,000 barrels a day to 10.8 million barrels.

The Vienna conference analysed oil market developments since it met in Vienna at the end of November and reviewed the oil market outlook for the remainder of 2018.

This was the company's first purchase through a mini-term tender to buy United States oil, IOC's Director of Finance A K Sharma said on Wednesday. Official US fuel storage data is due later on Wednesday from the Energy Information Administration (EIA).

Distillate stockpiles, which include diesel and heating oil, rose by 1.2 million barrels, versus expectations for a 220,000 barrels increase, the EIA data showed.

For the past week, crude imports averaged 7.9 million barrels a day, up by 182,000 compared with the previous week.

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