Investing.com - Oil prices dropped on Tuesday morning in Asia as Saudi Arabia and Russia vowed to raise crude output, slashing market concerns over looming sanctions on Iran that kick off in November.
Crude Oil WTI Futures for December delivery inched down 0.01% to $67.02 per barrel by 11:56 PM ET (03:56 GMT) on the New York Mercantile Exchange, while Brent Oil Futures for January 2019 delivery also fell 0.44% to $77.06 a barrel on London’s Intercontinental Exchange.
Saudi Arabia pledged earlier in the month to raise oil output to offset the fall from Iranian exports expected to be caused by the U.S. sanctions. The sanctions are set to take effect on Nov. 4.
Saudi Arabia will play a “constructive and responsible” role in world energy markets, despite recent criticism and isolation of the Kingdom following its role in the death of journalist Jamal Khashoggi.
“A Saudi pledge to produce as much oil as possible, and the stock market rout, have sharply reduced concerns about the Nov.4 implementations of U.S. sanctions against Iran,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, told Reuters.
Another major oil exporter, Russia, also said on Saturday that there is no reason for the country to cut its production levels.
The crude output from these two countries plus the U.S. reached 33 million barrels per day (bpd) for the first time in September, a jump of 10 million bpd since the beginning of the decade and enough to cover about a third of global demand, according to Refinitiv Eikon.
The ongoing sell-off in stock markets is also rattling the oil market, as U.S. equities fell again on Monday. The Dow Jones Industrial Average slipped 0.99% overnight, while the S&P 500 fell 0.66% and the NASDAQ Composite dipped 1.63%.
This comes after a Bloomberg report showed that Washington is considering new tariffs on the remaining $257 billion worth of Chinese imports that have not yet been hit by the ongoing trade war, if U.S. President Donald Trump and China’s leader Xi Jinping fail to reach an agreement during upcoming trade talks.