Published: Mon, July 09, 2018
Markets | By Otis Pena

Oil prices at highest level in three years

Oil prices at highest level in three years

Brent crude futures LCOc1 were down 6 cents, or 0.1 percent, at $77.33 a barrel.

U.S. West Texas Intermediate (WTI) crude futures were down 14 cents, or 0.2 percent, at $72.80.

Oil prices seesawed on Friday in a nervous market as the United States implemented a raft of tariffs on Chinese goods, which should prompt Beijing to retaliate, potentially including a duty on USA crude imports.

On Thursday, the U.S. Energy Administration (EIA) announced that U.S. crude inventories had risen 1.2 million barrels in the week to June 29, to 417.88 million barrels.

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"The embassy of the Republic of Korea denies any claims that it would not lift any Iranian crude and condensate in July", Xinhua reported on Saturday, after last week Reuters quoted sources as saying Iran's third-largest oil importer had announced it would stop buying crude from it in anticipation of US sanctions against Tehran.

Representing a modest 5% of China's overall crude imports, these supplies are worth $1 billion a month at current prices - a figure that seems certain to fall should a duty be implemented.

Indications are growing that show the United States can not rely on Saudi Arabia for too long to make up for the missing Iranian oil supplies once American sanctions are re-imposed against the country.

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Although the current list of products caught in the tariff war does not include energy-related products, oil traders continue to monitor the events because Beijing has threatened a 25-per cent tariff on USA crude imports.

"The Korean government is negotiating with the United States to get exemptions from the restrictions on Iranian oil purchases", the embassy also said in its statement. He added that his refinery had cancelled USA crude imports and would switch to Middle East or West African supplies instead.

"Looming U.S. sanctions on Iran, however, are causing serious concerns amongst market players".

It estimated that once USA sanctions are fully implemented, some 1.7 to 2 million bpd of crude and condensate would be taken out of the market.

Oil prices are likely to be weighed down by the trade conflict as investors are concerned about the impact of the tariffs and counter tariffs on global economic growth, analysts said.

"At the same time, Venezuela can do nothing to stop its own production decline and will lose another 400,000 bpd by year-end with production going to below 1 million bpd", FGE said, adding that another 300,000 bpd of Libyan capacity was disrupted.

Top exporter Saudi Arabia told OPEC it raised oil output by nearly 500,000 barrels per day last month, OPEC sources said, a sign Riyadh wants to make up for shortages elsewhere and dampen prices.

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