Iranian rial hits record low against dollar on mounting economic woes

Iranian rial hits record low against dollar on mounting economic woes

Iranian rial hits record low against dollar on mounting economic woes

According to the Associated Press, the Iranian rial ended its weekly trading figures against the dollar at a stunning rate of 150,000 rials to just $1; the lowest level on record.

The sharp increase was linked to mounting concerns that falling Iranian output could tighten markets once USA sanctions bite from November.

Eurotankers, which had a deal with MRPL to import two Iranian oil cargoes every month, has also said it can not undertake Iranian voyages from September, the sources said.

Even though the crude market of late has seen sporadic upward movement based largely on fear that US sanctions against Iran and weekly USA inventory draws herald a market tightening, it's hard to ignore fundamentals suggesting the reverse: and on Monday crude prices held steady as data revealed rising supplies and slowing demand. The first round began in early August, but in November, the most formidable sanction go into effect - those targeting Iran's oil exports and the banking sector.

Pair Iran with a booming US economy and soaring driver demand for gasoline, and Kilduff contended that Wall Street is coming up with a bullish scenario for crude that it hasn't had in years. On top of that, sanctions are set to hit Iran on November 4.

"There is a danger that the demand will be impacted as well".

People often focus on the supply side. but what happens if China reduces its consumption?

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"In part, this is because of the US -dollar's strength, weighing heavily on emerging market currencies, including the yuan, which in turn has pushed up the costs of all dollar-denominated commodities", he added. "The fundamental picture is the strongest I've seen in quite some time", Kilduff said.

Given that China and emerging markets more broadly are key demand growth areas for oil markets, analysts said crude prices had come under downward pressure.

"Exports from OPEC's third-biggest producer are falling faster than expected and worse is to come ahead of a looming second wave of US sanctions", said Stephen Brennock, analyst at London brokerage PVM Oil Associates.

The country produced an average of 11.21 MMbopd in August, according to data emailed Sunday by the Russian Energy Ministry's CDU-TEK unit.

Iran suffered the biggest drop across the group with a decline of 240,000 barrels a day, pushing its production down to 3.5 million barrels a day.

The reports said: "The impact of the sanctions will not be confined to the oil industry and will weigh on all components of GDP on the expenditure side".

The Islamic Republic may be left with only two economic partners, China and India, the only countries willing to snub the penalties issued by the United States, the report said.

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