Crude Flat as China Tariffs Targets US Oil Products

Crude Flat as China Tariffs Targets US Oil Products

Oil prices rose on Friday, supported by signs that USA sanctions on Iran are already reducing global crude supply.

Signs of slowing USA 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.

Thanks to these sanctions, Iran's exports could go down by as much as 1 million barrels of oil a day.

In spite of these bearish factors, analysts said prices were prevented from falling further because of USA sanctions against Iran, which target the financial sector from August and will include petroleum exports from November.

Concerns also remain over how much oil will be removed from global markets by renewed sanctions on Iran, despite worries that demand growth could weaken amid a trade disputes between the U.S. and China, the world's two biggest economies.

Benchmark Brent crude oil LCOc1 was down 30 cents a barrel at $74.48 by 0825 GMT. US light crude CLc1 was 3 cents lower at $67.83 a barrel.

The United States and China escalated their acrimonious trade war on Thursday, implementing punitive 25 per cent tariffs on $16 billion worth of the other's goods.

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 US real GDP growth "to 2.3 percent in 2019". It lost more than 1.5 per cent in the previous five sessions.

United States crude inventories fell 5.8-million barrels last week, the Energy Information Administration (EIA) said, more than the 1.5-million-barrel draw forecast by analysts polled by Reuters.

Hedge funds and other money managers cut their bullish wagers on US crude futures to the lowest level since mid-June.

"With countries including China and India unwilling to completely cut Iranian oil imports, and with the European Union also refusing to endorse the withdrawal from Iran nuclear deal, the USA finds itself in a compromising position to negotiate with Iran's customers to reduce oil imports", the statement added.

Meanwhile, a Chinese trade delegation is in Washington to discuss trade disputes with the USA side.

That means the world's three top producers, Russia, the United States and Saudi Arabia, now all churn out around 11 million bpd, meeting a third of global demand.