IOC signs up US crude in 1st ever term-tender deal

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In addition, USA crude futures' discount to Brent remains historically wide at $6.27 a barrel, encouraging United States oil exports. Helping to underpin prices is the first round of US sanctions against Iran which came into effect earlier in the week.

West Texas Intermediate, the USA benchmark, shed 2% to $67.70 per barrel after the Ministry of Commerce released a new list of American goods that will be subject to tariffs. Indian Oil is still awaiting direction from its government on Iranian crude imports, Sharma said.

Gasoline exports edged up 75,000 b/d to 588,000 b/d, while distillate exports slipped 51,000 b/d to 1.23 million b/d.

Last year, 56 percent of China's oil imports came from OPEC members. While Saudi Arabia was said to cut production last month despite a pledge in June by the Organization of the Petroleum Exporting Countries and allies to add more barrels, Russian Federation said it has the capacity to lift output to a post-Soviet record.

Syncrude Canada's nameplate capacity stands for roughly 10 percent of the Canadian crude oil supply.

US sanctions against Iran, which shipped out nearly three million barrels per day (bpd) of crude in July, officially came into effect at 0401 GMT (12:01am US Eastern time) on Tuesday. Brent crude, the standard for worldwide oil prices, rose 7 cents to $72.35 per barrel in London.

Iran's oil exports dropped by 7 percent to 2.32 million bpd in July-their lowest level in four months-as South Korea and Europe are slashing imports ahead of the return of the USA sanctions on Tehran, data from S&P Global Platts showed on Tuesday.

Additionally, as China limits purchases of US crude amid the trade war and risks of Middle East supply being disrupted by American intervention increase, speculation is rising that the world's top oil importer may find itself short of cargoes, he said. Iran's oil exports to India rose by more than 40,000 bpd from June to 706,452 bpd in July.

Traders were also scrutinizing weekly data on US crude stockpiles, which showed inventories fell by 1.4 million barrels in the week through August 3. In addition to crude oil and liquified natural gas, other listed products include diesel, coal, chemicals, cars, steel products and medical equipment.

Markets remained supported by the introduction on Tuesday of new USA sanctions against Iran, which initially target Iran's purchases of dollars - in which oil is traded - as well as metals trading, coal, industrial software and its automotive sector. United States gasoline stocks climbed 2.9 million barrels last week to 233.87 million barrels, while distillate stocks were up 1.23 million barrels at 125.42 million barrels.

"There is room for [prices in] the crude market to soften a bit more", says John Woods of JJ Woods Associates, adding that inventories could rise further as refineries head toward maintenance season after the summer driving season.

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