Oil prices oscillate in jittery market as US-China trade war begins

Oil prices oscillate in jittery market as US-China trade war begins

Oil prices oscillate in jittery market as US-China trade war begins

South Korea has suspended all buying of Iran crude and superlight crude, more commonly known as condensate after the US stepped up pressure on Iran crude buyers to stop importing its crude, Reuters reports, citing unnamed sources familiar with developments.

So far, WTI's relative resiliency is not something that would please US president Donald Trump, who in tearing up the nuclear deal with Iran and reimposing sanctions against the Islamic republic, is betting that Saudi Arabia and other countries will not only make up for the shortfall in Iranian crude exports but also flood the market with enough product to reduce gas prices at the American pump.

"This allows investors to respond to policy changes and price movements in volatile energy markets, which occur mostly in the European or U.S. time zones".

Earlier, OPEC and a group of non-OPEC countries agreed that they would return to 100 percent compliance with previously agreed oil output cuts, after months of underproduction by OPEC countries. For the week, WTI futures lost about 0.5% after hitting a 3-year high on Tuesday, while Brent lost about 3%.

U.S. West Texas Intermediate crude futures ended Friday's session up 86 cents a barrel, or 1.2%, to $73.80/Bbl, Kallanish Energy reports.

Although the current list of products caught in the tariff war does not include energy-related products, oil traders continue to monitor the events because Beijing has threatened a 25-per cent tariff on United States crude imports.

US crude futures slipped on Thursday after data showed an unexpected 1.3-million-barrel build in crude inventories.

"As South Korea's economy heavily relies on trade, it won't be good for South Korea if the global economic slowdown happens because of a trade dispute between U.S and China", said Lee Dal-seok, senior researcher at the Korea Energy Economic Institute (KEEI).

Oil benchmarks went in different directions again on Friday afternoon, with WTI trading up and Brent trading down as fears of the escalating U.S.

An executive from China's Dongming Petrochemical Group said he expected Beijing to soon impose the tariff on United States oil imports.

"The Korean government is negotiating with the United States to get exemptions from the restrictions on Iranian oil purchases", it said.

Oil was mixed last week as a Canadian supply outage supported U.S. crude prices, while an increase in production from Opec's biggest exporter Saudi Arabia pushed Brent lower.

Concerns that oil prices will be weighed down by a trade conflict between the USA and China have faded to some extent, analysts said.

A Chinese import tariff would make US oil uncompetitive in China, forcing its refiners to seek alternative supplies elsewhere.

Energy consultancy FGE warned on Friday of looming supply shortages due to U.S. sanctions against Iran, and because of disruptions elsewhere.

"Venezuela.will lose another 400,000 bpd by year-end with production going to below 1 million bpd", FGE said, adding that another 300,000 bpd of Libyan capacity was disrupted.

"Iran's exports are some 2.7-million barrels a day, including condensate", it noted.

Saudi Arabia told Opec that it increased production by nearly 500,000 barrels per day last month.

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