Oil prices have declined as turmoil in emerging markets is impacting global economic growth prospects.
Prices were also affected by an impending deadline for a potential fresh round of import tariffs to be imposed by Washington on an additional $200bn of Chinese goods.
Brent crude futures, the international benchmark for oil prices, dipped four cents to stand at $77.23 per barrel, while US West Texas Intermediate (WTI) crude futures fell 13 cents, or 0.2%, to trade at $68.59, Reuters reported.
Traders opined that further decline in prices was prevented by the US sanctions on Iran, with markets set to face supply crunch from November.
Asian shares posted losses for the sixth straight session in the wake of emerging market turbulence.
The deadline for public comments on potential US tariffs on further $200bn of Chinese goods is set to expire today, with many predicting that the administration will go ahead with the imposition of additional duties.
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Forex analyst Fawad Razaqzada was quoted by the news agency as saying: “The prospects of increased supplies from OPEC and her allies, and weaker demand from China and other emerging markets could weigh further on oil prices going forward, or at least limit the upside potential.
“This is because of the US dollar’s strength, weighing heavily on emerging market currencies, including the yuan, which in turn has pushed up the costs of all dollar-denominated commodities.”
As per the data released by the American Petroleum Institute, US crude stockpiles slipped 1.17 million barrels to 404.5 million barrels for the week ending 31 August.
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) projected global oil demand to cross the 100MMbpd a day mark for the first time this year.
On the supply side, markets are expected to experience tightness from falling oil production in Venezuela, as the country is reeling under political and economic crisis.
US investment bank Jefferies said: “The Brent forward curve has inverted to backwardation, signalling a tightening market that already feels the effects of declining Iranian exports.”