Oil prices drop as escalating trade war clouds demand outlook

BEIJING (Reuters) – Oil markets dropped on Tuesday as the latest escalation in the Sino-U.S. trade war clouded the outlook for demand, although concerns over tightening supply offered prices some support.

Brent crude () futures had declined 27 cents, or 0.35 percent, to $77.78 per barrel by 0054 GMT.

U.S. West Texas Intermediate (WTI) crude () fell 32 cents, or 0.46 percent, to $68.59 per barrel.

U.S. President Donald Trump on Monday said he would impose 10 percent U.S. tariffs on about $200 billion worth of Chinese imports.

U.S. Treasury Secretary Steven Mnuchin last week invited top Chinese officials to a new round of talks on the dispute, but thus far nothing has been scheduled.

“The growing trade dispute has hurt trading sentiment. The impact on economic growth is slowly dripping in, which again hurts oil prices,” Wang Xiao, head of crude research at Guotai Junan Futures, said on Tuesday.

But supporting crude futures were potential supply cuts from U.S. sanctions on Iran. Sanctions affecting Iran’s petroleum sector will come into force from Nov. 4.

Iranian crude oil export loadings have declined by 580,000 barrels per day in the past three months, Bank of America Merrill Lynch (NYSE:) analysts said in a note to clients.

Meanwhile, oil output from seven major U.S. shale formations is expected to rise by 79,000 barrels per day to 7.6 million bpd in October, the U.S. Energy Information Administration said Monday.

Elsewhere, Russia’s energy minister, Alexander Novak, said on Monday that the country was ready to discuss cooperation with the United States to balance the oil market.

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 financial markets, it is one of the riskiest investment forms possible.