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ADIA, Citi analysts see ample oil supply to withstand Iran sanctions

Reuters  |  ABU DHABI 

(Reuters) - U.S. sanctions on are unlikely to impact the market due to a glut in supplies globally, but Iran's production capacity could be hit due to a possible squeeze in investments, the at Investment Authority (ADIA) said.

Big producers such as Saudi Arabia, Russia, the and others have enough capacity to ensure global supply, analysts at ADIA and said.

"You can't exclude spikes but basically there's too much in the world and that will prevail in the long-term," Christof Ruhl, at ADIA said on the sidelines of a financial conference in

"The system has already shown that there's ample surplus capacity in the world to more than meet the amount of taken out of for the time being," said Ed Morse, at Citi.

There is significant production coming out of the United States, Canada, and Middle Eastern countries, he said.

Citi's outlook for prices is strong prices of $80 a barrel through the winter and then with coming production Brent will end 2019 at $64-$65.

The on Monday restored sanctions targeting Iran's oil, and transport sectors and threatened more action to stop what called its "outlaw" policies, steps called economic warfare and vowed to defy.

Washington, however, gave 180-day exemptions to eight importers - China, India, South Korea, Japan, Italy, Greece, and

This group takes as much as three-quarters of Iran's seaborne oil exports, trade data shows, meaning will still be allowed to export some oil for now.

Iran's crude exports could fall to little more than 1 million barrels per day (bpd) in November, roughly a third of their mid-2018 peak. But traders and analysts say that figure could rise from December as importers use their waivers.

When production declines, it damages fields and capacity and that is more important in the medium to long term, said Ruhl.

"It is not going to help the sector, it means pulling out investments, it means financial isolation, declining exports and revenues and potentially declining production," he said, adding that it depends on how stringently the sanctions are executed.

Iran's ability to store is crucial to keep production up rather than its ability to sell in the short term, said Ruhl.

(Reporting by and Saeed Azhar; editing by David Evans)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, November 06 2018. 17:43 IST