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Oil mixed as Iran sanctions seen tightening market, trade spat weighs on trade

Friday,   10-Aug-2018   09:09 AM (IST)

Oil markets on Friday were torn between concerns that the U.S.-China trade dispute would stall economic growth, while Washington's sanctions against Iran were expected to tighten supplies. Front-month Brent crude oil futures were at $72.12 per barrel at 0246 GMT, up 5 cents from their last close. U.S. West Texas Intermediate (WTI) crude futures were flat at $66.81 a barrel. Despite the possibility of a slowdown in economic growth due to escalating trade tensions, oil markets are for now relatively tight, analysts said, mostly because of sanctions on Iranian oil exports the United States plan to implement in November. Although many other powers, including the European Union and major Asian buyers such as China and India oppose sanctions, many are expected to bow to American pressure. Analysts expect the drop-off in Iranian crude exports to range between 500,000 barrels per day and 1.3 million bpd. The reduction will largely depend on whether major buyers of Iranian oil in Asia, including India, South Korea and Japan, receive sanctions waivers that would still allow some imports. It is also not clear whether China, the biggest buyer of Iranian crude, will bow to Washington's pressure. Friday's markets acted cautiously amid heightened trade tensions between Washington and Beijing. In the latest round, China said it would impose additional tariffs of 25 percent on $16 billion worth of U.S. imports, which would include refined products, autos and medical equipment. Crucially to oil markets, however, crude has been dropped off the list. U.S. crude exports to China, seen as a tool to reduce America's trade deficit with Asia's biggest economy, have soared in the last two years and by the middle of this year were worth around $1 billion per month.