US Begins Importing Iraqi Oil After Saudis Cut Exports

The turmoil in the Middle East comes amid concerns that rising US output could exacerbate the oversupply problem, as USA crude production has averaged more than 9.3 million bpd for four straight weeks and is expected to reach almost 10 million bpd by next year.

West Texas Intermediate, the US benchmark for the price of oil, was down in parallel to $47.71 per barrel.

Crude output in the United States, meanwhile, has jumped more than 10 per cent since mid-2016 to 9.34 million bpd, close to levels of top producers Saudi Arabia and Russian Federation.

The U.S.'s oil imports rose 356,000 barrels per day (bpd) to 8.34 million bpd last week, according to the EIA data.

US stocks of crude oil and gasoline surprisingly rose last week as refinery runs declined and exports fell, official data showed on Wednesday.

Traders will be closely watching USA weekly oil data due Wednesday.

OPEC crude oil production is expected to average 32.3 million barrels per day in 2017 and 32.8 million barrels per day in 2018, about 0.2 million barrels per day and 0.4 million barrels per day, respectively, lower than previously forecast, the EIA further said.

Iran is the only OPEC member with room for growth under a current deal to stem production in an effort to balance the market.

Saudi Arabia and UAE are OPEC's major crude exporters, with a much more significant impact on global oil prices. The market expectation for crude stocks was a decline of 3.5 million barrels.

Brent futures fell 1% to $49.60 per barrel, as the global benchmark falls below $50. Yet, what was more disturbing perhaps, to the market, was a drop in implied demand for US petroleum products across the board, raising concerns about the momentum of the USA economy.

Brent crude prices were at $48.32 US per barrel mid-morning Wednesday, down $1.80, or 3.6%. West Texas Intermediate light sweet crude futures were trading at just above $46 a barrel.

Some analysts saw a risk that rivalries between OPEC members could weaken the production cut agreement.

"The relentless increase in USA oil production appears to have the market anxious that the Opec cuts will be completely nullified by the increased U.S. production", William O'Loughlin, analyst at Australia's Rivkin Securities, wrote in a note to clients on Tuesday.

The United States has begun importing Iraqi oil at a rate of 1.1 million barrels per day to replace export cuts announced by Saudi Arabia late last month, new figures compiled by Bloomberg show.

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