Oil prices rise towards $85 on surprise drawdown in United States crude stockpiles

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Oil prices fell on Tuesday on evidence of higher USA oil production and increasing US crude inventories, but reports of a fall in Iranian oil exports helped to limit losses.

India's Reliance Industries Ltd (RELI.NS), owner of the world's biggest refining complex, has halted imports of Iranian crude ahead of US sanctions against Tehran's oil sector, its joint chief financial officer said.

USA crude inventories fell by 2.1 million barrels last week, compared with analyst expectations for a build of 2.2 million barrels, American Petroleum Institute data showed after Tuesday's settlement.

What could the current uncertainty surrounding U.S. -Saudi relations mean for oil and gasoline prices?

Worldwide benchmark Brent crude for December delivery rose 9 cents, or 0.1 percent, to $80.87 per barrel, while the U.S. West Texas Intermediate crude for November delivery was up 5 cents at $71.83 a barrel. Meanwhile, crude oil imports into the U.S., averaged around 7.6 million barrels per day, up around 218,000 per day from the previous week.

Saudi Arabia is the second largest supplier of crude to the US, with only Canada sending more.

"I mean, it has the potential to really blow up and to send prices to numbers that I didn't think we'd see again in our lifetime".

"Today's price decline to below our expected support at the $70 level would appear to set the trade up for a weaker pricing environment than we had anticipated", Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

Front-month London Brent crude for December delivery was up 23 cents, or 0.3 per cent, at $80.28, having ended down 1.7 per cent. Meanwhile, President Donald Trump and his top diplomat cautioned against putting the entire U.S. -Saudi relationship at risk over dissident writer Jamal Khashoggi.

US sanctions on Iranian oil exports are due to kick in on November 4.

I was on CNBC Asia on Sunday evening as oil prices jumped higher, discussing how the disappearance of Jamal Khashoggi was unlikely to impact energy flows between the US and Saudi Arabia.

Stocks at the Cushing, Oklahoma, delivery hub for WTI rose by 1.5 million barrels, the API said, the fourth straight week of increases, if confirmed by official data due at 10:30 a.m. EDT (1430 GMT) on Wednesday.

Reuters reported on October 15 that oil tankers continued to carry Iranian oil exports to China, India, Turkey, Italy, and a few other destinations earlier this month, one month ahead of the reimposition of oil sanctions.

New Dehli: Saudi Arabia Monday committed to meeting India's rising oil demand and said it is keen to invest in fuel retailing and petrochemical business in the world's fastest-growing energy consumer.