Breaking News
0

Oil dips on trade dispute, but Iran sanctions tighten outlook

CommoditiesAug 10, 2018 03:01AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO Worker inspects a pump jack at an oil field in Tacheng, Xinjiang

By Henning Gloystein

SINGAPORE (Reuters) - Oil prices dipped on Friday on worries that an escalating trade dispute between Washington and Beijing will stall economic growth and demand for fuel, even as renewed U.S. sanctions against Iran are expected to tighten supplies.

Front-month Brent crude oil futures (LCOc1) were at $71.88 per barrel at 0646 GMT, down 19 cents, or 0.3 percent from their last close.

U.S. West Texas Intermediate (WTI) crude futures (CLc1) were down by 22 cents, or 0.3 percent, at $66.59 a barrel.

Prices eased on a possible slowdown in economic growth due to escalating trade tensions.

For the week, Brent is set for a near 2 percent fall, while WTI is heading for a drop of nearly 3 percent.

"The market seems to be focused on fears of reduced demand from China, partially due to the effects of the trade wars between China and the United States," said William O'Loughlin, investment analyst at Australia's Rivkin Securities.

In the latest round of tariffs, China said it would impose additional tariffs of 25 percent on $16 billion worth of U.S. imports.

Although crude was removed from the list, replaced by refined products and also liquefied petroleum gas (LPG), many analysts say Chinese imports of American crude will still fall significantly.

"Already we are hearing that Chinese refiners are holding back on U.S. crude, despite escaping tariffs," ANZ bank said.

Growing global trade tensions have also led to a slump in the currencies of major emerging economies such as India, Turkey and China.

These devaluations have made imports of oil, which is traded in U.S. dollars, more expensive, potentially denting demand.

"The major devaluation of many emerging market currencies relative to the U.S. dollar means that in local terms oil is higher than what we see on the screen," U.S. investment bank Jefferies said on Friday.

China's automobile sales fell 4.0 percent in July from a year earlier to 1.89 million vehicles, an industry association said on Friday, amid rising concern over the potential fallout of a Sino-U.S. trade spat.

IRAN SANCTIONS

While the demand outlook was getting gloomier, supplies may tighten with the re-introduction of U.S. sanctions against Iran, which from November will also include oil exports.

Although other powers, including the European Union, China and India oppose sanctions, many are expected to bow to American pressure.

"We do not believe that sanctions have been fully priced into Brent, leaving room for a significant run-up in prices towards the end of the year," BMI Research said.

Analysts expect the drop-off in Iranian crude exports to range between 500,000 barrels per day (bpd) and 1.3 million bpd, with buyers in Japan, South Korea and India already dialing back orders.

The reduction will depend on whether major buyers of Iranian oil in Asia receive sanctions waivers that would still allow some imports.

It was also not clear whether China, the biggest buyer of Iranian crude, will bow to Washington's pressure.

Oil dips on trade dispute, but Iran sanctions tighten outlook
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments
trade black
trade black Aug 09, 2018 10:08PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This article and many others are wrong. Dispute or not wouldn’t slow demand. But rather put further pressure globally. See you at 85 EOY!
Reply
0 0
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email