Crude oil prices dropped Tuesday as renewed doubts of a U.S.-China trade pact stoked concerns over global growth, while U.S. sanctions on Iran and Venezuela tightened supply and helped to curtail losses, Kallanish Energy reports.
President Trump Sunday said he would raise tariffs on $200 billion worth of Chinese goods from 10-25% by Friday. The comments negatively impacted both Asian and U.S. stock markets.
U.S. West Texas Intermediate crude futures fell 85 cents Tuesday, to $61.40 per barrel, dropping 1.4%, to the weakest closing price since March 29.
Brent crude futures fell $1.31, or 1.8%, to $69.93/Bbl at roughly 2:30 p.m. ET, nearing the lowest settlement price since April 4.
Oil markets remain tense as the U.S. has tightened sanctions on Iranian oil exports and plans to bulk up its armed forces in the world’s top oil-exporting region.
U.S. officials announced Sunday the movement of the Abraham Lincoln aircraft carrier strike group and a bomber task force towards the Middle East was meant to counter “credible threats,” but Tehran dismissed the move as “psychological warfare.”
U.S. sanctions have already cut in half Iranian crude exports over the past year, to less than 1 million barrels per day (Mmbpd), with shipments to customers expected to drop to as low as 500,000 Bpd in May as sanctions tighten.
U.S. Energy Secretary Rick Perry said Tuesday Saudi Arabia was increasing its oil production to meet needs due to the sanctions on Iran. Sanctions also continue on Venezuela, an original member of oil cartel Opec.
Some analysts, however, predict production curbs totaling 1.2 Mmbpd since Jan. 1, put in place by Opec+, which includes most Opec members and a number of other producer-nations led by Russia, would continue to boost prices.
In the U.S., crude stocks have climbed to their highest point since September 2017, and were forecast to have added another 700,000 barrels last week, according to analysts in a Reuters poll.
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