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Business News/ Markets / Commodities/  Oil slides as Donald Trump's tiff with China offsets tensions over Iran
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Oil slides as Donald Trump's tiff with China offsets tensions over Iran

Brent crude lost 58 cents, or 0.8%, to $69.79 a barrel after US President Donald Trump escalated his rhetoric against China, saying the Asian nation “broke the deal” he was negotiating with it
  • Unexpected disruptions due to turmoil in OPEC members are also keeping investors on edge
  •  (Reuters)Premium
    (Reuters)

    Singapore: Oil dropped as flaring trade tensions between the world’s two biggest economies overshadowed concerns over supply disruptions from Iran to Venezuela.

    Futures in New York fell as much as 1.1% as US President Donald Trump escalated his rhetoric against China, saying the Asian nation “broke the deal" he was negotiating with it. Beijing has warned it will retaliate if he follows through on a plan to raise tariffs. Crude is retreating after gaining 1.2% on Wednesday following a surprise drop in American inventories and Iran’s threat to abandon a 2015 nuclear accord in response to Washington’s sanctions.

    All that is raising uncertainty in the market, with unexpected disruptions due to turmoil in OPEC members such as Venezuela, Nigeria and Libya keeping investors on edge. Speculation is swirling over whether other producers such as Saudi Arabia will pump more to ease a supply crunch. Meanwhile, Trump’s plan for higher levies on Chinese goods is roiling assets across the globe as it threatens to worsen a growth outlook that had been improving.

    “It’s a very nervous market," said Vandana Hari, founder of Vanda Insights, a Singapore-based provider of oil market analysis. There is “heightened uncertainty" on several fronts including the trade deal, supply-demand and Iran, she said, adding that “the smallest of headlines could push prices in either direction, much more than they normally do."

    West Texas Intermediate crude for June delivery fell as much as 65 cents to $61.47 a barrel on the New York Mercantile Exchange, and was trading 0.8% lower at $61.60 at 12:44 p.m. Singapore time. The contract closed up 72 cents at $62.12 on Wednesday.

    Brent for July settlement lost 58 cents, or 0.8%, to $69.79 a barrel on the London-based ICE Futures Europe exchange. It rose 0.7% on Wednesday. The global benchmark crude was at a premium of $8.08 to WTI for the same month.

    Trump made his latest comments on trade at a campaign rally in Florida, just hours before Chinese Vice Premier Liu He was set to arrive in Washington for talks. The US is set to raise tariffs on $200 billion of the Asian nation’s imports to 25% from 10% on Friday.

    The specter of a full-blown US-China trade war has pushed down stocks -- with an index of Asian equities set for its worst week since October -- and weighed on commodities including copper and soybeans.

    In the US crude market, nationwide stockpiles shrank by 3.96 million barrels in the week to May 3, compared with the median estimate in a Bloomberg survey for a 1.9 million-barrel increase. Inventories still remain high, close to levels last seen in September 2017.

    Elsewhere, in response to tighter US sanctions that have squeezed Iranian exports, the Islamic Republic threatened to abandon limits on uranium enrichment unless Europe throws it an economic lifeline within 60 days. While regional rival Saudi Arabia has signaled its willingness to meet all orders from buyers seeking replacements for Iranian oil for June, whether it will make up for the lost barrels over the longer term remains to be seen.

    “There are supply issues from Nigeria, Venezuela, Libya and now Iran," Vanda’s Hari said. “But the market, for the time being, is reacting just to what’s happening with the trade deal."

    This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed

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    Published: 09 May 2019, 10:59 AM IST
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