Economy

Oil prices edge up, U.S.-China trade war in focus

Oil prices edge up, U.S.-China trade war in focus

Even if the US government grants some waivers to allies, FGE estimated 1.7 million to 2 million bpd of crude and condensate would be cut out of markets once its sanctions are implemented.

USA crude futures fell on Thursday as official data showed the country's oil inventories rose unexpectedly last week.

It shows the year-on-year percentage growth in USA non-farm payrolls, splitting the results by oil and non-oil producing states.

Most Indian refineries are created to process heavy, high-sulphur Iranian crude while bulk of the growth in American supply has been in light, low-sulphur oil produced in shale developments.

Oil prices dipped on Friday as markets grew more nervous ahead of a raft of import tariffs set to be imposed later in the day by the world's two biggest economies, the United States and China, threatening global growth. Standing in the line of fire are US crude supplies to China, which have surged from virtually zero before 2017 to 400,000 barrels per day (bpd) in July.

U.S. West Texas Intermediate crude futures ended Friday's session up 86 cents a barrel, or 1.2%, to $73.80/Bbl, Kallanish Energy reports.

As part of the retaliatory response, Beijing has threatened a 25% tariff on U.S. crude imports, although it has not specified an introduction date.

But for a crude market focused mainly on short-term impacts, analysts see nothing but gloom around the corner: in discussing the possibility of China placing a tariff on US oil, Commerzbank said in a note that "Chinese demand would then shift to other suppliers, [and] because the oil market is already in tight supply due to the numerous outages, this would drive global prices (Brent) further up".

Concerns that oil prices will be weighed down by a trade conflict between the USA and China have faded to some extent, analysts said.

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USA crude inventories rose by 1.2 million barrels in the week ending June 29, the Energy Information Administration said on Thursday, much higher than analysts' expectations for a decrease of 3.5 million barrels.

Looming larger over markets is the U.S./China trade dispute.

In an early sign of future times, an executive from China's Dongming Petrochemical Group, an independent refiner from Shandong province, said his refinery had already cancelled USA crude orders.

The concerns that oil prices will fall due to the US-China trade conflict have nearly disappeared.

"The Korean government is negotiating with the United States to get exemptions from the restrictions on Iranian oil purchases", it said.

Earlier this month, Reuters also reported that South Korea had upped crude oil imports from Kazakhstan, already looking for alternative supplies as the November 4 deadline for the sanctions draws nearer.

Energy consultancy FGE this week issued a stark warning of looming supply shortages due to USA sanctions against Iran, and because of disruptions elsewhere. By some estimates, about 1.7 to 2 million bpd of crude and condensate would be cut out of markets once the sanctions are implemented.

Saudi Arabia told Opec that it increased production by nearly 500,000 barrels per day last month.


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