Global oil prices recovered after sharp falls a day earlier, though markets remained tensed over to escalating trade tensions between the US and China.
Earlier, the US increased tariff on $200bn of Chinese imports, a move which China termed deeply regrettable and warned of appropriate countermeasures.
Brent crude oil benchmark gained 34 cents to trade at $70.73 per barrel, while US West Texas Intermediate (WTI) crude futures climbed 39 to touch $62.09 a barrel, reported Reuters. Global benchmark Brent prices are set for their second consecutive weekly loss as the prices are slightly down this week, while US crude may see the first weekly gain in three weeks.
According to International Energy Agency data, the US and China accounted for nearly 34% of the global oil consumption in the first quarter of 2019. Analysts predict that the escalating trade dispute between the two major economies will impact the oil market.
On the other hand, oil prices were supported by US sanctions on Iran and Venezuela as well as by the Organization of the Petroleum Exporting Countries (OPEC)-led supply cuts. The oil market was also supported by the US Energy Information Administration predictions that oil demand will increase by 1.4 million barrels per day in 2019.
In 2018, the US withdrew from a nuclear deal with Iran and re-imposed sanctions on the Middle Eastern country. However, it allowed some countries to continue to import Iranian crude, an exemption which Washington ended in May. The US now aims to reduce Iran’s oil exports to nil.
OANDA senior market analyst Edward Moya was quoted by Reuters as saying: “We could see the Iran situation be the biggest bullish catalyst for oil prices.
“With the ending of the U.S. sanction waivers becoming effective this month, Iranian shipments are falling sharply.”