U.S. sanctions on Iran to heat oil markets again: IEA

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Earlier in July, First Vice President Eshaq Jahangiri announced that in a move to beat USA sanctions, Iran will let private companies to export crude oil.

As oil prices have risen, profits "have improved, but they're not there yet in terms of making money", Todd Heltman, a senior energy analyst at investment firm Neuberger Berman Group LLC, told the WSJ.

The futures markets were further weakened late in the session after data from industry group the American Petroleum Institute (API) showed that US crude stocks unexpectedly rose by 3.7 million barrels the week-ending August 10, compared with analysts' expectations for a drawdown of 2.5 million barrels.

The cartel said OPEC production in July, as reported by secondary sources, rose month over month by 41,000 barrels a day to a daily average of 32.32 million barrels.

This is subjected to the U.S sanctions on the oil exports from Iran, returning in the month of November.

"The recent cooling down of the market, with short-term supply tensions easing, now lower prices, and lower demand growth might not last", the IEA said in a monthly report.

"There are lots of variables in the oil market, the most important of which is Iran", said Tamas Varga, analyst at London brokerage PVM Oil Associates. Meanwhile, U.S. output, which had surged to a record last month, has slowed in recent weeks.

Rapid oil demand that helped OPEC balance the market is expected to moderate next year.

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Trade tensions with the USA have weakened currencies in emerging markets as investors pull cash out of countries like India and China and convert it to United States dollars, which are still seen as a safe haven.

On the bearish side, the escalating trade war could "lead to slower economic growth, and in turn lower oil demand". The global benchmark crude advanced 74 cents to $72.81 on Friday.

"The direct impact on global demand for oil is negligible", Fritsch said.

The U.S. wants to cut Iran's oil export, but everyone, with even a limited knowledge of worldwide affairs, knows that such thing is impossible, the official added.

Iran is the third-largest producer among the members of the Organization of the Petroleum Exporting Countries.

But the increases matter little when weighed against China's tanker imports, which fell from more than 8 million bpd during January and June to about 7.3 million bpd in July. The original figure for June was 130 percent.

Marketmen said sentiment turned better after oil prices inched up in global markets as USA sanctions against Iran pointed towards a tighter market, although concerns over slowing economic growth amid global trade tensions kept a lid on gains.