Oil prices oscillate in jittery market as US-China trade war begins

Strait of Singapore

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.

Benchmark Brent LCOc1 was up 40 cents at $77.51 a barrel by 0850 GMT.

U.S. West Texas Intermediate and worldwide bench-mark Brent crude oil futures are trading mixed in limited action.

USA crude inventories rose by 1.2 million barrels in the week ending June 29, the Energy Information Administration said on Thursday, much higher than analysts' expectations for a decrease of 3.5 million barrels.

The escalating trade friction between the United States and China, two of the world's biggest economies, remained the central focus among participants.

The United States has announced the introduction of tariffs on Chinese goods, which are planned to be raised at 12:01 a.m. Washington D.C. time (0401 GMT) on Friday. While OPEC is facing mounting pressure from Trump to do more, America's sanctions on group members Iran and Venezuela are adding uncertainties, just as US tariffs on Chinese goods kick in on Friday.

Beijing has threatened a 25 percent tariff on US crude imports, although it has not specified an introduction date. The unofficial leader of the Organization of Petroleum Exporting countries has never pumped more than 10.6 million barrels per day on average over a single month, according to BAML.

US gasoline prices are at a four-year-high this year as a result of the higher price of crude.

How close is China to imposing the tariff on US crude oil? He added that his refinery had cancelled US crude imports and would switch to Middle East or West African supplies instead.


Concerns that oil prices will be weighed down by a trade conflict between the United States and China have faded to some extent, analysts said.

The major story remains the looming supply shortages due to USA sanctions against Iran.

"Iran's exports are some 2.7 million bpd, including condensate", it noted.

Even if the USA government grants some waivers to allies, FGE estimated 1.7-million to 2-million barrels a day of crude and condensate would be cut out of markets once its sanctions were implemented.

Some are already reacting.

Last Friday, unnamed sources told Reuters that the Korean government had pressured refiners into suspending orders for July shipments of Iranian crude, which is the first time this has happened since 2012.

"Trump sends every day a new message that creates uncertainty in the oil market", Bijan Zanganeh said in an interview with Iranian broadcaster IRIB.

"It is possible the kingdom could lift production by another 1.3 million-1.4 million bpd beyond anything it has ever produced before but at the moment there is no way of knowing for certain", Reuters added.

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