Prices of oil at the international market dropped yesterday as the latest escalation in the Sino-US trade war clouded the outlook for demand, although concerns over tightening supply offered prices some support. Brent crude futures had declined 27 cents, or 0.35 per cent, to $77.78 per barrel while US West Texas Intermediate (WTI) crude fell 32 cents, or 0.46 per cent, to $68.59 per barrel.
US President Donald Trump on Monday said he would impose 10 per cent US tariffs on about $200 billion worth of Chinese imports. US Treasury Secretary Steven Mnuchin last week invited top Chinese officials to a new round of talks on the dispute, but thus far nothing has been scheduled.
“The growing trade dispute has hurt trading sentiment. The impact on economic growth is slowly dripping in, which again hurts oil prices,” Wang Xiao, head of crude research at Guotai Junan Futures, said on Tuesday.
But supporting crude futures were potential supply cuts from US sanctions on Iran. Sanctions affecting Iran’s petroleum sector will come into force from Nov. 4. Iranian crude oil export loadings have declined by 580,000 barrels per day in the past three months, Bank of America Merrill Lynch analysts said in a note to clients.
Meanwhile, oil output from seven major US shale formations is expected to rise by 79,000 barrels per day to 7.6 million bpd in October, the US Energy Information Administration said. Elsewhere, Russia’s energy minister, Alexander Novak, said on Monday that the country was ready to discuss cooperation with the United States to balance the oil market.