Oil steadies as Saudi Arabia plans output increase

US Treasury Secretary Steve Mnuchin meets with Prime Minister Benjamin Netanyahu in Jerusalem

Saudi energy minister says his country would not be able to compensate for possible oil disappearance from global markets once the U.S. re-imposes its sanctions against Iran.

"However, this idea may have been put to bed on Monday when Saudi Energy Minister Khalid al-Falih said that "there is no intention" for such action, and that Saudi Arabia would play a 'constructive and responsible" role in world energy markets. He added that Riyadh had capacity to increase production to 12 million bpd. "It is still not a foregone conclusion that the kingdom's production increase will be enough to compensate for the potential output loss from Iran and Venezuela", said Abhishek Kumar, senior energy analyst at Interfax Energy in London.

U.S. West Texas Intermediate and international-benchmark Brent crude oil are under pressure Tuesday.

WTI (oil futures on NYMEX) is seen extending its declines in the European session, now down over a percent near fresh six-week lows reached just ahead of the 68 mark, as the bears remain in control amid reduced appetite for the risk assets such as the equities, oil etc.

The discount of USA front-month futures below the second-month rose to 25 cents, its highest since November 2017.

Saudi Arabia claims that Jamal Khashoggi died in a physical altercation inside its consulate in Istanbul.

"The big unknown is how much Iranian oil will be off the market and we'll know in about a month's time".

Saudi credit default swaps, a form of insurance against a sovereign debt default, have shot up to near one-year highs over the past week, reflecting investor nervousness.

The main price driver in Asia on Monday was the looming start of U.S. sanctions against Iran's oil exports, which will start on November 4. The countries have successfully clinched a deal to curb oil output within the OPEC+ group, and Russian Federation is ready to sell its S-400 missile defense system to Saudi Arabia.

Iran, the third-largest producer of the Organization of Petroleum Exporting Countries (OPEC), has blamed US President Donald Trump for oil price hikes, but the US president has pointed the finger at OPEC and called on the oil-producing body to boost output.

The outlook for demand next year, meanwhile, is deteriorating.

OPEC itself estimates demand for its crude will fall to an average of 31.8 million bpd next year, from an average 32.8 million bpd this year.

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