Oil slumps near $64 as Opec clash looms, trade war soars
Oil fell near $64 a barrel as Saudi Arabia and Russia prepared for a clash with allied crude producers over whether to lift output and as China and the US exchanged threats over trade.
Futures in New York dropped as much as 2.3%, on course for the lowest close since April 9 after a 2.7% decline on Friday. Iran says Venezuela and Iraq will join in blocking a proposal to increase production that’s backed by Saudi Arabia and Russia when Opec and its allies meet in Vienna this week. China said it would impose tariffs on a variety of US goods, including crude and gasoline, in response to President Donald Trump’s $50 billion levy on Chinese imports.
Crude has dropped more than 10% from its high in May amid signs Saudi Arabia and Russia are seeking to lift output curbs that have eliminated a global surplus and boosted prices. Meanwhile, traders are trying to digest the impact from both the US and China issuing tariffs on goods and the threat of a broader trade war between the world’s two largest economies.
“Oil is down in a knee-jerk reaction to possibilities of a trade war intensifying between the US and China, and Opec’s production increase breaking the demand and supply balance,” Takayuki Nogami, chief econo-
TOKYO:
mist at state-backed Japan Oil, Gas & Metals National Corp., said by phone from Tokyo. “If the US and China continue to retaliate and Saudi Arabia and Russia keep signalling a production increase, that will further weigh on prices.”
West Texas Intermediate crude for July delivery fell as much as $1.47 to $63.59 a barrel on the New York Mercantile Exchange and traded at $64.02 at 4.01pm in Tokyo. The contract declined $1.83 to $65.06 on Friday. Total volume traded was about 44% above the 100-day average. Brent futures for August settlement lost as much
as 99 cents to $72.45 a barrel on the London-based ICE Futures Europe exchange. The contract dropped $2.50 to $73.44 on Friday. The global benchmark crude traded at a $9.22 premium to WTI for the same month.
Trading on the Shanghai International Energy Exchange is closed for a Chinese public holiday. The contract fell 0.2 percent on Friday.
Investors are looking ahead to what could be the most contentious Opec meeting in recent years. On the one side is Saudi Arabia and Russia, who want to relax the quotas as soon as next month.