Published: Sat, September 22, 2018
Finance | By Gustavo Carr

Oil prices drop as escalating U.S.-China trade war…

Oil prices drop as escalating U.S.-China trade war…

Brent for November settlement fell 9 cents to $78.09 a barrel on the ICE Futures Europe exchange.

Oil prices were little changed on Monday as the market weighed deepening trade tension between the US and China that is expected to dent global crude demand and potential supply tightening due to Iran sanctions.

U.S. Energy Secretary Rick Perry said in an interview with Reuters on Friday that he did not expect any price spikes and that the world's top three oil producers could between them raise global output in the next 18 months.

Global oil prices eased in early Asian trading on Monday on concerns that the United States is poised to impose additional tariffs on China, outweighing supply fears from upcoming sanctions on Iran.

Oil prices firmed on Tuesday after Saudi Arabia indicated it was comfortable with a higher price range ahead of a meeting between major producing countries in Algeria. Iran's share of OPEC revenues increased to 10% in 2017 to its highest level since 1999, recovering from declines from 2012 through 2015 that resulted from sanctions targeting Iran's oil exports.

While trade disputes and financial woes in some countries may affect crude demand, the IEA said supply risks are the more important issue.

Iran's OPEC governor said on Saturday that Saudi Arabia and Russian Federation have taken the oil market "hostage" and accused other producers of turning OPEC into a USA tool.

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According to data by the JODI database, which collects self-reported oil figures from 114 countries, Saudi Arabia's crude oil exports in July dropped by 126,000 bpd month on month, to 7.12 million bpd.

Crude posted a third weekly advance out of four as Iranian sanctions take center stage, with investors eyeing the impact on supply.

Reuters reported on September 5 that Saudi Arabia wanted oil to stay between $70 and $80 to keep a balance between maximising revenue and keeping a lid on prices until US congressional elections.

Shale explorers added last week the most oil rigs in a month as a pipeline bottleneck in the busy U.S. Permian Basin is encouraging drilling in other areas.

In May, U.S. President Donald Trump pulled out of an worldwide nuclear deal with Iran and announced sanctions against OPEC member Iran.

Mohammed Sanusi Barkindo also said an agreement between OPEC and non-members that cut production and helped bring prices back up from lows of $30 a barrel in January 2016 was now "a permanent feature".

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