by Heesu Lee and Grant Smith
Oil headed for a weekly decline as the tanker attacks in the Middle East were overshadowed by a deepening trade war and swelling U.S. stockpiles.Futures slipped in New York on Friday and were poised for a 3.4% weekly loss. The White House blamed Iran for the attacks near the Strait of Hormuz, the biggest global choke-point for oil flows, while Tehran rejected the allegations. Meanwhile the International Energy Agency said world supply will rise far more than demand next year as new projects start, putting further pressure on OPEC.While a war in the Middle East would be very disruptive for energy flows, the region is less important for global crude markets than it was a couple of decades ago due to the rise of U.S. shale production. Unless the situation escalates dramatically, the prospect of a prolonged trade war between China and America — the world’s two biggest economies — looks likely to remain the major price driver.“The trade angst and growth concerns tower over the market,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt.
West Texas Intermediate for July delivery fell 12 cents to $52.16 a barrel on the New York Mercantile Exchange at 8:32 a.m. local time. It rose $1.14 on Thursday following the attacks on the tankers in the Middle East.
Brent for August settlement was little changed at $61.38 a barrel on London’s ICE Futures Europe Exchange after adding 2.2% on Thursday. It’s down 3% this week, heading for a fourth weekly decline. The global benchmark crude traded at an $8.97 premium to WTI for the same month.
U.S. officials released images that they said show Iran was involved in Thursday’s attacks on the tankers. An Islamic Revolutionary Guard Corps patrol boat “was observed and recorded removing the unexploded limpet mine from the Kokuka Courageous,” one of the two vessels attacked, said Navy Captain Bill Urban of the U.S. Central Command. However, the Central Command also said it had no interest in engaging in a new conflict in the Middle East.
Meanwhile, America and China remained deadlocked on trade, with U.S. economic adviser Larry Kudlow warning that Beijing may face consequences if President Xi Jinping declines an invitation to meet with President Donald Trump in Japan this month. Trump has repeatedly threatened to raise tariffs if his Chinese counterpart doesn’t meet him at the Group of 20 summit.
|Other oil-market news:
The crew of one of the tankers damaged Thursday was forced to board an Iranian vessel that took them to the country, according to a report from the vessel’s insurer, DNK. Despite having already been picked up by a merchant ship nearby, Iran’s navy “demanded that the crew were transferred to them,” according to DNK.
America’s dependence on foreign oil is continuing to shrink, with crude imports from OPEC members falling to the lowest since 1986 in March, Energy Information Administration data showed.
China probably isn’t complying with U.S. sanctions on oil exports from Iran, U.S. Deputy Energy Secretary Dan Brouillette said Friday.
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