Oil Prices Fall Amidst Escalating Trade Jitters

Oil Prices Fall Amidst Escalating Trade Jitters

Oil Prices Fall Amidst Escalating Trade Jitters

Crude oil futures rose more than 1% Tuesday on signs OPEC would not be prepared to raise output to address shrinking supplies from Iran, and as Saudi Arabia signaled an informal target near current levels. Data from the InterContinental Exchange shows open interest in calls that give the owner the right to buy Brent futures at $80 and $85 by next week grew by almost 45 per cent on Monday and Tuesday to an equivalent of 54 million barrels of oil. "When you have major producers facing supply challenges, it's of concern" for OPEC and consumers alike, he said.

U.S. West Texas Intermediate crude was up 94 cents, or 1.4%, at $69.85/Bbl, off a session high of $70.42/Bbl.

USA sanctions affecting Iran's oil exports come into force on November 4 and many buyers have already scaled back Iranian purchases.

Meanwhile, American Petroleum Institute data showed that crude stockpiles increased last week, while those in the storage hub at Cushing in Oklahoma fell.

OPEC ministers are also slated to meet this Sunday, but no decisions or adjustments are expected to be made while the OPEC group meets to discuss output policies and their compliance.

Increases in both crude oil prices and in net OPEC oil exports drove revenues higher in 2017, and the EIA expects that revenues will continue to increase in 2018, based on its August 'Short-Term Energy Outlook'.

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He did not specify how crude producers would compensate for declining exports from Iran, with new USA sanctions due to hit the Islamic republic´s oil industry on November 4.

Russian Energy Minister Alexander Novak said an oil price between $70 and $80 was temporary and sanctions-driven, adding the long-term price would stand around $50 a barrel.

Futures in NY climbed 1.4 per cent on Tuesday. Energy ministers of Saudi Arabia, a USA ally, and Russian Federation said in May they were prepared to ease output cuts to calm consumer worries about supply.

Elsewhere, the latest escalation in the tit-for-tat trade war between the United States and China stoked worries over global economic growth and demand for oil.

China, one of the world's largest oil consumers, on Tuesday added $60 billion of US products to its import tariff list.

The tariffs are likely to limit economic activity in both China and the USA and that should lower oil demand growth as less fuel is consumed to move goods for trade.

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