China continues oil imports from Iran to show independence from United States sanctions

Oil Resumes Decline as Trade War Overshadows Iran Tanker Seizure

Oil prices steadied on Wednesday after falling at the start of the session, with the potential for damage to the global economy and fuel demand from the intensifying China-US trade dispute continuing to cast a shadow over the market.

Brent crude futures LCOc1 were down $2.17, or 3.7%, at $56.77 a barrel by 9:44 a.m. CDT (1444 GMT), setting a fresh seven-month low. Prices have lost more than 20 percent since hitting their 2019 peak in April.

At 438.9 million barrels, US crude oil inventories are about 2% above the five year average for this time of year, according to the EIA crude oil and petroleum weekly storage data, reporting inventories as of August 2, 2019.

US commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.4 million barrels from the previous week.

But Trump on Tuesday dismissed fears the trade row with China could be drawn out.

Barrels of crude oil.

The 2019 budget, which was signed by President Muhammadu Buhari in May, was based on oil production of 2.3 million bpd (including condensates) with an oil benchmark price of $60 per barrel. Oil was also swept up in a global meltdown of stock and commodity markets after rate cuts in New Zealand, India and Thailand escalated recession fears and spurred a flight to USA treasuries and other safe havens.

But since July 30, the market sentiment has taken a turn for the worse with concerns about demand outweighing any bullish factor, after the latest tariff threat from President Trump, Reuters market analyst John Kemp says.

The efficacy of OPEC aside, it seems all eyes are now focused somewhat desperately on a better 2020: Russell Hardy, chief executive officer at Vitol, told Bloomberg that his company has continuously revised oil product growth downward this year, but next year will likely see "subdued growth".

Apple-Metro CEO Zane Tankel on the uncertainties facing the oil market. The narrowing spread reflects EIA's assumption that crude oil pipeline transportation constraints from the Permian Basin to refineries and export terminals on the U.S. Gulf Coast will ease in the coming months. Still, U.S. stock indexes tumbled more.

Official data from the government's Energy Information Administration (EIA) is due on Wednesday.

Tensions in the Middle East remain high after Iran seized a number of tankers in recent weeks in the Strait of Hormuz, a major chokepoint for oil shipments.

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