Financial markets settled down Wednesday following the previous day's big moves when an easing of concerns over an imminent USA -led military strike on Syria sent stocks sharply higher and oil prices down.
"However, the central geopolitical risk stems from the Iranian threat of closure of the Strait of Hormuz - a critical conduit for global oil supplies with 17 per cent of global crude oil and products travelling through this narrow channel on a daily basis", said Khoman.
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. The sanctions did not include Iran's oil exports.
Prices of the barrel of the American reference for the sweet light crude oil are falling further today, breaking below the $68.00 mark per barrel.
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.
Traders focused on the latest developments in the trade dispute between the United States and China, as oil prices resumed their decline. There is the concern of global trade slowing down, but there's also a lot of geopolitical noise out there as well.
Iran ranks as the third largest oil producer among its peers in the Organization of Petroleum Exporting countries, or OPEC, having shipped out almost 3 million barrels per day of crude in September.
While the trade war and the USA inventories report dragged oil prices down on Wednesday, for the coming months, investors, traders, and analysts expect the return of the US sanctions on Iran to continue keeping a floor under the price of oil.
Oil prices rose on Tuesday after USA sanctions on Iranian goods went into effect, intensifying concerns that sanctions on Iranian oil, expected in November, could cause supply shortages. Earlier today, crude oil sold off after it was announced that Saudi Arabia has resumed oil shipments through the Red Sea shipping line of Bab al-Mandeb over the weekend.
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Oil prices slumped Wednesday after Beijing announced it would retaliate against the Trump administration with a 25% tariff on another $16 billion worth of USA products, including crude exports to China.
United States sanctions on Iran's energy sector are set to be re-imposed after a 180-day "wind-down period" ending on November 4.
The U.S. crude oil production went down to 10.8 million barrels per day.
Official U.S. fuel storage data is due later on Wednesday from the Energy Information Administration. That compares to its previous year's spot purchases of 6.6 million barrels from the shale producer.
Alhajji said "The July production numbers show a large increase in OPEC production close to 300,000 barrels per day, but exports increased only slightly, preventing prices from declining further".