Mubasher: Oil prices dropped on Tuesday amidst worries about the outlook for crude consumption, but they remained supported after the US announced new sanctions against Iran, Reuters reported.
By 7:36 am GMT, US Nymex crude futures declined by 0.14% to $57.82 per barrel (pb), while global benchmark Brent futures fell by 0.31% to $64.66 pb.
Nymex surged by 10% last week, as Brent jumped by 5% after Iran downed a US surveillance drone on Thursday in the Gulf, further fuelling tensions stoked already by attacks on two oil carriers in the region in May and June.
The odds of progress in the trade talks between the US and China at this week’s Group of 20 (G20) summit were waning, as investors were expecting a meeting between President Donald Trump and his counterpart Xi Jinping.
This could further dent global economic growth prospects, hitting demand for oil and other commodities.
However, “a compromise might be to delay imposition of 25% tariffs on the $325 billion of imports,” threatened by Trump, energy and security consultancy Mathyos Advisory founder Tom O’Sullivan was quoted by Reuters.
Adding to concerns about fading demand for oil were weak US manufacturing figures released on Monday by the Federal Reserve Bank of Dallas.
Nevertheless, market supply was set to remain relatively tight, as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, seemed likely to roll over an agreement to withhold output when they meet on 1 and 2 July in Vienna, analysts told Reuters.
In addition, geopolitical tensions in the Middle East escalated further, as the US administration imposed sanctions against Iranian Supreme Leader Ayatollah Ali Khamenei and other senior officials, an unprecedented move to step up pressure on Tehran.
“This would appear to effectively rule out any talks or negotiations to end the crisis,” O’Sullivan said.
Sanctions against Iran and Venezuela have already slashed oil exports from the two oil-rich producers.
On the other hand, US production had been on the rise, prompting some Russian officials to accuse Washington of carving out market share for its hydrocarbon exports.
