Oil prices were mixed on Tuesday, pressured by concerns that the escalating Sino-U.S. trade dispute could slow the global economy, while U.S. sanctions on crude exporters Iran and Venezuela helped keep the market on edge.
Brent crude oil futures were at $71.12 per barrel at 0710 GMT, 12 cents, or 0.2 percent, below their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $62.30 per barrel, 5 cents above their last settlement.
Traders said prices were weighed down by worries that the stalling trade talks between the United States and China would dent global economic growth as well as fuel consumption.
Talks between the world’s two biggest economies hit a wall over the weekend, when U.S. President Donald Trump announced a raft of new import tariffs on Chinese goods.
Tanker brokerage Eastport said in a note that “worsening trade friction between Washington and Beijing poses a downside risk to our forecasts” for petroleum products.
On the supply side, oil markets remain tense as the United States tightens sanctions on Iranian oil exports, saying on Monday it was boosting its military presence in the Middle East.
Iran has threatened “reciprocal actions” against U.S. sanctions, which could mean restarting some of its nuclear program.
The U.S. sanctions have already halved Iranian crude oil exports over the past year to below 1 million barrels per day (bpd), and shipments to customers are expected to drop to as low as 500,000 bpd in May as sanctions tighten.
Beyond Iran, Washington has also placed sanctions on the Venezuelan government under President Nicolas Maduro, disrupting supplies from the country, a founding member of the Organization of the Petroleum Exporting Countries (OPEC).
Goldman Sachs said on Tuesday that “the recent Brent pull-back has taken prices too low in the face of tight fundamentals and growing supply risks, just as refiners come back from extended spring turnarounds.”
The U.S. bank said “we therefore expect a near-term Brent rebound”, although it added that “beyond the next couple months … all these supply and demand cross-currents will dissipate to bring a balanced global oil market, once new (U.S.) Permian transport capacity is online and core-OPEC ramps up.”
Goldman said crude oil prices would “decline later this year with our 3Q19 Brent forecast of $65.50 per barrel.”
Bank of America Merrill Lynch said it expected Saudi Arabia “to bring back oil production slowly as Iranian barrels exit the market”, adding that overall it saw Brent crude oil prices having a floor at $70 per barrel in current market conditions. (Reuters)