London: Oil fell on Tuesday ahead of a possible increase in Organization of the Petroleum Exporting Countries (Opec) crude supply, and as an escalating trade dispute between the US and China unleashed sharp sell-offs in many global markets.
Expectations are growing that Opec and partner Russia will agree to gradually increase production in order to make up for falls in Venezuela and potential shortfalls from Iran, which is facing US sanctions related to its nuclear activity, when the group convenes in Vienna on Friday. The oil ministers have started gathering in Vienna for the meeting.
The US and China are threatening punitive tariffs on each other’s exports, which could include oil supplies, which sent Chinese stocks to their lowest in almost a year and kept European indices and other industrial commodities such as copper and nickel under pressure.
Brent crude futures eased by 11 cents to $75.23 a barrel by 1410 GMT, while US crude futures fell 60 cents to $65.25 a barrel. Oil traders are closely watching a threat by China to react to US tariffs by putting a 25% duty on US crude oil imports, which have surged since 2017 to a value of almost $1 billion per month.
Global oil demand will be revised downwards and as such oil will not be immune from all of the potential negative impact of international trade wars. Energy consultancy Wood Mackenzie said the US “would find it hard to find an alternative market that is as big as China". It said China takes around 20% of all US crude exports.