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Oil edges back from big slump as Iran sanctions return to focus

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By Reuters
Oil edges back from big slump as Iran sanctions return to focus
A worker inspects a pump jack at an oil field in Tacheng, Xinjiang Uighur Autonomous Region, China June 27, 2018. . REUTERS/Stringer   -   Copyright  CHINA STRINGER NETWORK(Reuters)

By Henning Gloystein

SINGAPORE (Reuters) – Oil prices on Wednesday clawed back a fraction of their hefty losses the day before that came after Saudi Arabia said it would make up for supply disruptions from U.S. sanctions starting next month on Iran’s petroleum exports.

Front-month Brent crude oil futures <LCOc1> were at $76.72 a barrel at 0320 GMT, 28 cents, or 0.4 percent, above their last close.

U.S. West Texas Intermediate (WTI) crude futures <CLc1> were at $66.66 a barrel, up 23 cents, or 0.4 percent, from their last settlement.

That came after Brent closed down 4.3 percent and WTI 4 percent in the previous session.

Saudi Energy Minister Khalid al-Falih said at an investment conference in Riyadh on Tuesday that despite expected supply disruptions from U.S. sanctions against Iran that kick in from Nov. 4, Saudi Arabia would step up to “meet any demand that materialises to ensure customers are satisfied”.

“Oil prices fell substantially … as Saudi Arabia released assurances it could supply more to the global market,” Australia’s Rivkin Securities said.

Despite the slump, analysts said markets remained tight because of the looming sanctions.

“We still see Brent reaching $85 per barrel by year-end,” said U.S. bank Morgan Stanley.

Into 2019, however, the broader economic outlook could be darkening.

China’s state planner said on Wednesday it would step up financial support for regions most hit by the ongoing trade war between Washington and Beijing in which both sides have slapped import tariffs on hundreds of goods.

Meanwhile, South Korea’s KOSPI-100 equity index <.KS100> has now fallen by nearly 19 percent over the past year, the fastest rate of decline since the financial crisis of 2008/09.

The KOSPI-100 has typically correlated closely with growth in international trade, given the South Korean economy’s strong orientation towards exports.

(Reporting by Henning Gloystein; Editing by Richard Pullin and Joseph Radford)