Opec confident China-US dispute won't hit demand

Opec confident China-US dispute won't hit demand

Five Caspian Sea states reached a breakthrough agreement on sovereign rights to the sea, paving the way for new oil and gas extraction - and pipelines - after more than two decades of disputes.

"The Trump Administration has forecast that global buyers will cut Iranian imports by as much as one million barrels a day once renewed sanctions take effect, according to people familiar with the matter".

Around two-thirds of US oil producers failed to balance costs in the second quarter, despite crude oil prices rising above $70 per barrel, the Wall Street reports.

"Everything is weakening, but from a pretty elevated level", said Jeff Brown, president of energy consultancy FGE.

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Analyst say trade disputes between the United States and China as well as turmoil in emerging markets could curb growth and energy demand.

Oil prices edged lower, with Brent crude was at 72.72 dollars a barrel and US crude was at 67.33 dollars.

The United States has started implementing new sanctions against Iran, which from November will also target the country's petroleum sector.

The Organization of Petroleum Exporting Countries boosted crude production by 41,000 barrels a day in July, despite sliding output in Libya, Iran and Saudi Arabia, the group said in its monthly report. Those operational challenges make balancing lofty growth objectives and demands for fiscal restraint increasingly hard. "But the impact on investment mood is starting to show", Brown said. Total volume traded was about 39 per cent below the 100-day average.

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Prices have been suppressed below US$70 this month as fears of a trade war between the U.S. and China temper gains, with neither side showing signs of backing down.

Weaker currencies in Asia and tariff-suppressed trade slows economic growth, reduces purchasing power, and eventually hits fuel demand.

Benchmark Brent crude oil was down 10 cents at $72.71 a barrel by 11:30am GMT.

"The high crude prices appear to have been taking a toll on demand", said Sukrit Vijayakar, Director of Indian oil consultancy Trifecta. As growth in the Eurozone and in China (the world's largest importers of crude oil) continue to decelerate, demand is softening accordingly. Those figures were mainly due to adjustments to production in China during the first half of the year. It's also some way off a record of more than 20 million bpd from April 2016.

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BMI Research said oil markets would "struggle for direction, as uncertainty around both the impact on supply from the Iranian sanctions and escalating trade tensions between the USA and China persists".

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