Oil prices dipped on Wednesday after China reported relatively weak import data, although the market remained well supported by falling USA crude inventories and the introduction of sanctions against Iran.
Brent crude for October delivery increased by 1.03 percent and steeled at 75.55 dollars per barrel on ICE Futures Europe.
Indian refiners' interest in US crude will be welcome news to shale producers looking for buyers outside of China, which is likely to scale back imports as the trade dispute between the administration of President Donald Trump and Beijing escalates.
Many energy analysts believe new sanctions will remove far less of Iran's barrels than the last time when about half its oil exports were erased from the market as a result of USA and European sanctions.
"This clearly shows there is hesitation among buyers around continuing to purchase Iranian crude with the implementation of these sanctions", said Warren Patterson, commodity strategist for ING Bank NV, adding that the dip in flows will probably result in tighter supply of oil.
In Iran, America's first round of sanctions hit on 7 August and a second, tougher set targeting oil sales, will take effect on 5 November.
Some of the sanctions resume on Tuesday.
"It certainly is a reminder to everyone that the U.S.is serious about sanctions, and it's doubtful they will grant waivers", said John Kilduff, partner at Again Capital Management in NY. The WTI lost 0.47 USA dollar to settle at 68.49 dollars a barrel on the New York Mercantile Exchange, while Brent erased 0.24 dollar to close at 73.21 dollars a barrel on the London ICE Futures Exchange.
It also is not clear if the State Department could allow sanction waivers, which were used in the Obama era to wean the world off of Iranian oil and avoid supply shocks.
Oil has declined about 7 percent from the highs of June as trade tensions between the USA and China imperil economic growth and energy demand. "The reports that Saudi Arabia's production actually dropped in July continue to provide support for the market".
Oil is being supported this week after Saudi crude production unexpectedly fell in July and US drilling appeared to slow.
Output was expected to rise 1.31 million bpd to 10.68 million bpd in 2018, lower than last month's forecast of growth of 1.44 million bpd to 10.79 million, the EIA said. It shipped out nearly 3 million barrels per day (bpd) of crude in September, equivalent to around 3 percent of global demand.
However, July imports were still the third-lowest so far this year. China is the only one that has flatly refused to reduce its intake of Iranian crude although it did say it will not expand its Iranian imports. US Eastern time (0401 GMT) on Tuesday.
Much of the northern hemisphere has been gripped by extreme heat this summer, pushing up demand for industrial and residential cooling.
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