Saudi Arabia unable to replace lost Iranian oil - Iran’s oil minister

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"Actually the request that America made to Saudi Arabia and other OPEC countries is to be sure that if there is any loss of supply from Iran, that we will supply that".

"Prices are responding to the Saudis' commitment to replace the lost Iranian barrels and that has calmed down some supply crunch fears", Will Yun, a Seoul-based commodities analyst at Hyundai Futures Corp., said by phone.

The Saudi crown prince also said he's getting close to striking a deal with Kuwait on resuming production of two jointly owned fields that can produce half a million barrels a day of crude.

Meanwhile, it said it expected all allies and friends to bring down their purchase of Iranian oil to zero or be ready to face punitive sanctions beginning November 4.

"The market and rising prices are the best evidence of concern that the market is in short supply and is rightly nervous about the severe shortage of oil in the coming months", he added.

The IMF, however, lifted its projections for economic growth in Saudi Arabia, the region's biggest economy, and its oil-rich neighbours in the Gulf.

Meanwhile, the demand for United States dollars in Iran has increased since Washington pulled out of the nuclear deal with Tehran.

Price gains this week were limited by Saudi Arabia and Russia's saying they would raise output to at least partly make up for expected disruptions from Iran, OPEC's No. 3 producer, due to the USA sanctions that take effect on November 4.

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As Wednesday saw crude prices drop dramatically due to sudden concerns about oversupply and waning demand, it was unsurprising that some experts would warn of "extreme volatility" for prices due to the USA sanctions against Iran. A second round of sanctions targeting Iran's oil sector is due to go into effect on November 5.

The growth is being "driven by a pickup in non-oil economic activity and a projected increase in crude oil production in line" agreed by the Organization of the Petroleum Exporting Countries and independent producers, the International Monetary Fund said.

Iran may indeed have not cut production yet to match the rate of decline in its exports, as the country appears to be storing more oil on ships as it did during sanctions that applied until the 2015 nuclear deal. The White House is now considering waivers to sanctions for countries that are lowering imports.

The Middle East crude benchmarks were mixed on Monday with DME Oman's premium to Dubai swaps easing while cash Dubai's premium to swaps edged higher.

Pradhan also added the country was considering evolving a different payment system to buy Iran's oil and that it could pay using Indian rupees.

Late last month, Trump urged OPEC producers to ratchet up production levels to prevent further price rises ahead of the mid-term elections in early November. "This is an obvious fact".

Oil prices rose on Tuesday as more evidence emerged that crude exports from Iran, OPEC's third-largest producer, are declining in the run-up to the re-imposition of USA sanctions and as a hurricane moved across the Gulf of Mexico.

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