The sanctions squeeze on oil supply from Russia and Iran are tightening the oil market and supporting crude prices as buyers look for additional legit barrels while sanctioned supply is piling in floating storage, according to the world\u2019s biggest independent oil trader, Vitol. \u00a0<\/p>\n
\u201cThe traditional buyers of those two supply sources are reaching for more Western or Saudi supply sources, which is then in turn tightening the real market,\u201d Vitol\u2019s CEO Russell Hardy said at the International Energy Week conference in London on Thursday, as quoted by Bloomberg<\/a>.<\/p>\n Fears of massive oversupply this year haven\u2019t filtered through oil prices. Instead, the U.S. sanctions on Russia\u2019s top producers and the pressure on India to slash Russian purchases as part of the recently reached U.S.-India trade deal, have acted to support oil prices, alongside geopolitical flare-ups in Iran and Venezuela.<\/p>\n India has reportedly asked its refiners to consider buying<\/a> more crude cargoes from the U.S. and Venezuela on the spot market as Indian oil purchases are under scrutiny following the trade deal with the United States. Indian refiners are steering clear<\/a> of Russian crude in the wake of the trade deal with the United States, which the White House\u00a0said<\/a> includes India\u2019s commitment \u201cto stop directly or indirectly importing Russian Federation oil.\u201d<\/p>\n Meanwhile, tankers carrying a total of up to 12 million barrels<\/a> of crude oil are either en route or floating close to China in East Asian waters, waiting for buyers in the world\u2019s top crude importer, as India is pulling back.<\/p>\n The outlook of global supply-demand balances needs to consider the shunning of the sanctioned supply, \u201cbecause that\u2019s roughly a million barrels a day that\u2019s not finding a refinery \u2014 it\u2019s just sitting on the high seas,\u201d Vitol\u2019s Hardy said. \u00a0<\/p>\n \u201cCracks are beginning to appear and geopolitics at the moment is definitely putting more pressure on the supply side,\u201d the executive said in remarks carried by Reuters<\/a>.<\/p>\n Early on Thursday, Brent Crude prices<\/a> were trading at $69 per barrel, after rallying in the past weeks. The U.S. benchmark, WTI Crude<\/a>, was just below $65 per barrel, at $64.35.<\/p>\n By Charles Kennedy for Oilprice.com<\/p>\n