(Bloomberg) -- Oil headed for a weekly decline as the tanker attacks in the Middle East provided only a relatively small boost to prices that have been hammered by a deepening trade war and swelling U.S. stockpiles.
Futures in New York edged lower after rising 2.2% Thursday. The White House blamed Iran for the attacks near the Strait of Hormuz, the biggest global choke-point for oil flows, while Tehran rejected the allegations. Meanwhile, the U.S. and China remained deadlocked on trade, with economic adviser Larry Kudlow warning Beijing may face consequences if President Xi Jinping declines an invitation to meet with President Donald Trump in Japan this month.
While a war in the Middle East would be very disruptive for energy flows, the region is less important for global crude markets than it was a couple of decades ago due to the rise of U.S. shale production. Unless the situation escalates dramatically, the prospect of a prolonged trade war between the world’s two biggest economies looks likely to remain the major price driver.
See also: As Oil Tankers Burn in the Gulf, Investors Focus on Trade War
“Growth concerns spurred by U.S.-China trade spat as well as rising American crude inventories are hindering oil’s attempt to recover,” said Kim Kwangrae, a commodities analyst at Samsung (KS:005930) Futures Inc., said by phone. “Still, we may not see a further plunge in prices as escalating geopolitical conflicts in the Middle East should at least keep crude buoyed.”
West Texas Intermediate futures for July delivery fell 17 cents, or 0.3%, to $52.11 a barrel on the New York Mercantile Exchange at 10:07 a.m. in Singapore after dropping as much as 1.1% earlier. The contract advanced $1.14 on Thursday and is down 3.5% for the week.
Brent for August settlement rose 2 cents to $61.29 a barrel on London’s ICE (NYSE:ICE) Futures Europe Exchange after closing up 2.2% Thursday. It’s down 3.2% so far this week, heading for a fourth weekly decline. The global benchmark crude traded at a $8.91 premium to WTI for the same month.
