Investing.com - Looks like oil bears are calling the bluff on the much-hyped U.S. sanctions on Iran.
After a one-day pause, crude futures extended their rout from October, tumbling as much as 2% as details of import waivers granted to buyers of Iranian crude gave the impression that it could be business as usual for Tehran (for another six months at least).
Worries that Republicans might lose control of Congress in Tuesday's midterm elections, a specter that could cause serious challenges to President Donald Trump's policies and leadership, also weighed on the market, analysts said.
U.S. WTI settled down 89 cents, or 1.4%, at $62.21 per barrel. It has lost almost 20% since hitting four-year highs of nearly $77 in early October, technically pushing it into a bear market.
U.K. Brent crude, the international benchmark for oil, fell $1.17, or 1.6%, to $72 per barrel by 2:51 PM ET (19:51 GMT). That was about 16% off its four-year highs above $86 hit last month.
Eight importers of Iranian crude -- China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey -- will be allowed to continue buying from the Islamic Republic "temporarily," the Trump administration announced on Monday.
The market learned on Tuesday that the waivers will be for 180 days.
Reuters reported that the group of eight that got the waivers collectively took as much as three-quarters of Iran's seaborne oil. While Iran's sales could fall to little more than 1 million barrels per day (bpd) in November due to pre-sanctions compliance, the figures could rise again in December with the import exemptions granted by Washington.
Adding to the market's pressure were the details of the waivers: 360,000 bpd for China and 300,000 bpd for India, a daily quota of around 130,000 bpd for South Korea, along with Japan's plan to raise imports from Iran imminently.
"It appears that the bulls are disappointed," said Scott Shelton, energy futures broker for ICAP (LON:NXGN) in Durham, N.C.
"From what I can see, it looks like that the total impact of the sanctions will drop imports closer to 1 million bpd from the current levels of 1.762 million bpd of crude and condensate," Shelton said. "But I think the market fears a lack compliance and also fears that the 180-day window is too long. Frankly, the market trades poorly overall, and this information did not have enough shock or awe to get the market to turn around."
Notwithstanding the sanction waivers on Iran, top crude exporter Saudi Arabia has also pledged to maximize its production to offset any supply shortage.
U.S. shale oil output has, meanwhile, hit record highs, and domestic crude stockpiles are expected to have risen for a sixth-straight week, prompting fears that instead of a supply squeeze, there might be an oil glut.
Without imminent proof of market tightness from the sanctions, some think WTI will break below $60 a barrel and Brent under $70.
But others think the market was overplaying the impact of the waivers.
"The change to overall balances in Q4 is small in comparison to the extent of the change in sentiment and subsequent selloff in prices," said London-based Energy Aspects.