Oil steady as Saudi tensions balance demand outlook

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Oil prices extended gains into a fourth session on Wednesday, buoyed as industry data showed a surprise decline in USA crude inventories and as geopolitical tension over the disappearance of a prominent Saudi journalist stoked supply worries.

India's Reliance Industries Ltd (RELI.NS), owner of the world's biggest refining complex, has halted imports of Iranian crude ahead of US sanctions against Tehran's oil sector, its joint chief financial officer said.

While such a declaration “may do little to quiet widespread suspicion that Crown Prince Mohammed bin Salman was behind an assassination plot, it could leave enough room for the US and others to generally maintain diplomatic ties with the Saudi government, ” said Robbie Fraser, commodity analyst at Schneider Electric, in a note.

The dollar index, which measures the greenback against six major peers, increased 0.55 percent to 95.5746 at 3:00 p.m. (1900 GMT).

Global benchmark Brent crude for December delivery rose 9 cents, or 0.1 percent, to $80.87 per barrel, while the U.S. West Texas Intermediate crude for November delivery was up 5 cents at $71.83 a barrel.

The country announced in August it was in talks with the USA government to receive exemptions on Washington's sanctions on oil imports from Iran, which is Seoul's third crude supplier.

Weak U.S. gasoline margins and growing U.S. shale output could also cap gains in crude prices, market participants said. "Trump thinks he can bring the oil prices down by bullying", Iranian Oil Minister Bijan Zanganeh said, according to the semi-official news agency ILNA.

Saudi Arabia has been under pressure since Khashoggi, a critic of Riyadh and a USA resident, disappeared on October 2 after visiting the Saudi consulate in Istanbul. "And we have seen sanctions on Iran".

Inventory data from the United States energy department's Energy Information Administration (EIA) is due at 2.30pm GMT on Wednesday.

"The focus within the oil trade during the next couple of weeks is likely to be on Iran and Saudi Arabia", Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

On Prime minister Narendra Modi meeting with captains of domestic and global oil industry on Monday, Mr Pradhan said that Prime Minister was speaking from the prospective of consumer community of emerging economies.

West Texas Intermediate for November delivery tumbled $2.17 to settle at $69.75/bbl on the New York Mercantile Exchange, the lowest level in a month. He also said availability of crude oil to replace lost import volumes from Iran in the wake of United States sanctions is not an issue.

Saudi Arabia and Kuwait will struggle to resume oil production from jointly operated fields that produced some 500,000 bpd any time soon due to operational differences and souring political ties, sources said on Wednesday.