USA crude slumps below $70/bbl after large stock build

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Crude stockpiles in the US have risen for four straight weeks, the longest run of gains since early 2017. Ten thousand people have been killed and millions displaced, and it might lead to the worst starvation in a century.

The government's official response has been more circumspect, but it nonetheless warned that it would respond to any action with even greater retaliation and pointed to the kingdom's "influential and vital role in the global economy". Washington should take the opportunity to undo this very bad complicity by withdrawing logistical and intelligence support. Trump has an opportunity to rebalance his regional policy in the coming weeks.

Under the sanctions, the USA wants all countries in the world to stop importing oil from Iran. OPEC's spare capacity, production that can quickly be brought online and sustained, is just 1.4 million barrels, the lowest since December 2016, according to the US Energy Information Administration.

Two takeways from Wednesday's trading activity: first, the resiliency and determination of USA producers continue to undercut persistent arguments from the analytical community that American output has hit its peak and won't be able to help compensate for the loss of Iranian crude due to the sanctions.

Saudi Arabia said this month it would ramp up production by 300,000 barrels per day to help offset a sharp reduction of Iran's crude exports next month.

A conflict between the United States and Saudi Arabia could be devastating for the oil market.

An unprecedented volume of Iranian crude oil is set to arrive at China's northeast port of Dalian this month and in early November before U.S. sanctions on Iran take effect. According to its numbers, Saudi output went from 10.09 million bpd in May, before OPEC+ made a decision to pump more crude, to 10.9 million bpd in June.

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For decades Saudi Arabia has been a byword for political stability and conservatism, which made it into a reliable source of energy to worldwide markets.

Undermining the strong refinery data, China did on Friday report its weakest economic growth since 2009 in the third quarter, with gross domestic product expanding by only 6.5 per cent, missing estimates.

This was much higher than the 1.8 million that traders had expected.

Meanwhile, India, reeling under rising retail oil prices, is looking up for some solace from Saudi Arabia, which is its second-biggest oil supplier behind Iran.

The United States is preparing to impose the new sanctions on Iran's oil industry after Washington withdrew from a nuclear deal between Tehran and other global powers earlier this year, but is also considering offering waivers to some allies that rely on Iranian supplies.

The opponents also believe that offering oil in the stock market can not counter the sanctions, because this market works based on the free market which stands on supply and demand.