Oil Heads for Biggest Loss in 7 Weeks as Demand Worries Bite

© Reuters.  © Reuters.

By Barani Krishnan

Investing.com – From the prospect of a U.S.- peace that could let the Islamic Republic flood the market again with its to threats of new tariffs on , worries about crude demand left oil bulls staring at their worst loss in seven weeks on Friday.

U.S. was up 11 cents, or 0.2%, at $55.40 per barrel by 12:55 PM ET (16:55 GMT)

London-traded , the benchmark for oil outside of the U.S., rose 27 cents to $62.20.

Article continues below Advertisement...

For the week, WTI was headed for a decline of more than 8%, its biggest loss since the week ended May 26. Brent was looking at a loss of more than 7%.

“The direction of the crisis depends almost entirely on decisions made in Tehran and Washington, making it subject to swift policy changes,” New York-based Energy Intelligence said in its Intelligence Weekly. “Phases of escalation followed by renewed peacemaking efforts would appear a likely pattern.”

Both Washington and Tehran have indicated in recent weeks that despite the grandstanding and hostilities aimed at each other the past year, they want to resolve their more-than-year-long standoff.

In a Thursday news conference at the Iranian mission to the , Foreign Minister Mohammad Javad Zarif suggested that President Donald Trump’s sanctions on Tehran’s oil and leaders be removed so that the two sides could talk.

Analysts believe that Zarif’s call will almost certainly be rejected by the Trump administration. For there to be talks, there should be no preconditions, Washington says. And in between all these, a U.S. warship in the Strait of Hormuz reportedly destroyed an Iranian surveillance drone on Thursday. But Tehran quickly denied losing any of its surveillance planes to Washington.

While it’s unlikely that Trump would agree to set aside all the sanctions he’s built against Iran’s oil and its leaders in order to bring Tehran to the negotiating table, it’s possible that he could meet Iran’s demands half-way. Trump could suspend his most objectionable sanctions against the Islamic Republic for a specified period – say three months — to give the peace process a chance.

Investing.com’s projections are that the price of WTI and will fall about $5 a barrel within a week or two of the announcement that the two sides are ready to talk. And every rebound thereafter will be checked by the possibility of an impending Iran Nuclear Accord 2.0.

Earlier in the week, Trump said a trade deal with China might not happen right away and that he considering heavier tariffs against , which did not buy U.S. farm products as expected. Any negative news on China tends to hurt as well.

Crude has also fallen over the past week compensating for overruns in estimates for the damage from Hurricane Barry.

Barry, which came ashore in central Louisiana on Saturday as a Category 1 hurricane, promptly weakened into a tropical storm. have since reopened their platforms in stages, pressuring prices.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the , it is one of the riskiest investment forms possible.

Source: Investing.com