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Oil Prices Fall Despite Elevated Tensions in Middle East

CommoditiesJul 05, 2019 01:16AM ET
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Investing.com - Oil prices fell on Friday in Asia despite heightened tensions in the Middle East due to the seizure of an Iranian oil tanker by British Royal Marines.

U.S. Crude Oil WTI Futures were down 1% to $56.77 by 1:15 AM ET (05:15 GMT). International Brent Oil Futures was down 0.03% to $63.29.

It was reported that British Royal Marines helped the authorities in Gibraltar seize the ship on the basis of evidence that it was heading to Syria in breach of EU sanctions. The news elevated tensions in the Middle East and could potentially disrupt supply.

Following the incident, Iran’s Foreign Ministry summoned the British ambassador to voice “its very strong objection to the illegal and unacceptable seizure” of its ship.

“This is the first time that the EU has done something so public and so aggressive. I imagine it was also coordinated in some manner with the U.S. given that NATO member forces have been involved,” said Matthew Oresman, a partner with law firm Pillsbury Winthrop Shaw Pittman, in a CNBC report.

“This is likely to have been meant as a signal to Syria and Iran - as well as the U.S. - that Europe takes sanctions enforcement seriously and that the EU can also respond to Iranian brinkmanship related to ongoing nuclear negotiations.”

U.S. National Security Advisor John Bolton said the British move was “excellent news.”

“America & our allies will continue to prevent regimes in Tehran & Damascus from profiting off this illicit trade,” Bolton said on Twitter.

Despite the news, oil prices were down today due to concerns on economic growth and weakening demand, according to analysts.

"Global growth remains the main factor holding back crude prices," said Alfonso Esparza, senior analyst at OANDA. "The OPEC+ deal will keep prices from falling too hard, but there must be an end to trade protectionism to assure the demand for energy products recovers."

Earlier this week, the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, agreed to extend production cuts until March 2020.

The Energy Information Administrationshowed on Wednesday that crude stockpiles fell 1.1. million barrels in the week ending June 28, below expectations of a draw of about 2.96 million barrels.

The data came after the American Petroleum Institute’s separate report, released late Tuesday, showed inventories fell by a larger 5 million barrels last week.

That suggests oil demand in the United States, the world's biggest crude consumer, could be slowing amid signs of a weakening economy.

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Oil Prices Fall Despite Elevated Tensions in Middle East
 

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