Oil slips as trade war worries outweigh Iran curbs

london — Oil prices slipped on Friday as concerns over the impact of a global trade war depressed sentiment, although impending US sanctions on Iran and falling Venezuelan output limited losses.

Benchmark Brent crude oil was down 40 cents a barrel at $77.37 by 1100 GMT. US light crude was 50 cents lower at $69.75.

US President Donald Trump threatened in an interview with Bloomberg News on Thursday to withdraw from the World Trade Organization, his latest salvo in a deepening dispute between the US and its major trading partners. Economists are worried that rising trade barriers between the world’s major economies will drag on global growth and, by extension, erode energy demand.

“You have to wonder if it (crude) can sustain these prices in a world where President Trump doubles down on his battle with the EU and China at the same time,” said Greg McKenna, chief market strategist at futures brokerage Axi Trader.

However oil markets are tightening with a recent surplus draining, trade figures show.

The volume of unsold crude stored in the Atlantic basin has dwindled from around 30 cargoes to just a handful in recent weeks, a Reuters analysis showed.

Brent is on track for a rise of more than 4 per cent in August with US light crude gaining 2 per cent. “The contracts are in a strong uptrend,” said Robin Bieber, who watches price charts for brokerage PVM Oil Associates. Investors are worried that, with Venezuelan supply falling sharply, Iranian crude supply will be cut sharply ahead of the imposition on US sanctions on Tehran in November.

“The November deadline to comply with the US demands for an Iran oil embargo is moving closer, and in anticipation, buyers seemingly have begun reducing their purchases,” said Norbert Ruecker, commodity analyst at Swiss bank Julius Baer.

“Venezuela remains equally concerning,” he added.

Many analysts say the uptrend in crude prices will continue.

“Brent prices will exceed $80 per barrel before the end of the year,” US bank Jefferies forecast on Friday.

you have to wonder if it (crude) can sustain these prices in a world where president trump doubles down on his battle with the eu and China at the same time Greg McKenna, Chief market strategist, Axi Trader