Chinese shipowners have quit hauling Iranian crude oil, while Iran has been putting in place measures to ensure its trade with China continues, despite the upcoming second round of US sanctions, Kallanish Energy learns.
Signs of slowing United States crude output growth and a weaker U.S. dollar also provided some support to oil prices, said Kim Kwang-rae, commodity analyst at Samsung Futures in Seoul.
Traders said the supply versus demand outlook for oil markets was relatively tight because of the looming U.S. sanctions against Iran, which will target oil exports from November.
Brent crude oil futures were at $74.65 per barrel, down 13 cents from their last close.
West Texas Intermediate (WTI) crude futures were at $67.90 per barrel, up 4 cents from their last settlement, buoyed by the decline in U.S. crude inventories.
USA crude rose more than 4 percent on the week, after seven consecutive declines, and Brent rose 5.3 percent after three weeks of falling prices.
Global markets were more cautious as the ongoing trade spat between the United States and China was seen as a drag on economic growth, traders said.
Afghan president calls for Eid cease-fire, Taliban to reply
Reports have meanwhile emerged that Russian Federation is planning to meet with the Taliban in Moscow on September 4. They have warned they will be releasing 500 prisoners, including some Afghan security forces.
Oil prices rose by a significant 2% on Wednesday to exceed the $74 mark, the highest recorded in the last two weeks. Instead, both countries activated another round of dueling tariffs on US$16 billion worth of each other's goods.
The shift shows how trade is being affected even before United States sanctions targeting Iran's crude exports snap back into effect in early November.
The trade war is "expected to shave up to 0.3-0.5 percentage points from China's real GDP growth in 2019", said Moody's Investor Service, adding it should cut 0.25 percentage point from projected USA real GDP growth "to 2.3 percent in 2019".
The American Petroleum Institute, an industry group, late Tuesday released data showing a 5.2 million barrel decline in USA crude oil stockpiles for the week ended August 17.
Investors are also closely monitoring OPEC as well as USA supplies before the U.S. sanctions on Iran's oil exports kick in this November.
Chinese ship owners are no longer accepting Iranian oil and its using its own tankers to supply oil to top United States customers as the impending American sanctions are expected to disrupt worldwide trade.
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