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Oil edges up on Iran sanctions, but trade disputes dent demand outlook

Reuters  |  SINGAPORE 

By Gloystein

SINGAPORE (Reuters) - prices edged up on on Friday on worries that renewed U.S. sanctions against will tighten supplies, although the escalating trade dispute between and restricted gains.

Front-month Brent futures were at $72.21 per barrel at 0444 GMT, up 14 cents, or 0.2 percent from their last close.

U.S. Intermediate (WTI) crude futures were up by 6 cents at $66.87 a barrel.

Despite the possibility of a slowdown in economic growth due to escalating trade tensions, markets are for now relatively tight, analysts said, mostly because of sanctions on Iranian the plans to implement in November.

Although other powers, including the European Union, and oppose sanctions, many are expected to bow to American pressure.

"We do not believe that sanctions have been fully priced into Brent, leaving room for a significant run-up in prices towards the end of the year," BMI Research said.

Analysts expect the drop-off in Iranian crude exports to range between 500,000 barrels per day (bpd) and 1.3 million bpd, with buyers in Japan, and already dialling back orders.

The reduction will depend on whether buyers of Iranian oil in receive sanctions waivers that would still allow some imports.

It was also not clear whether China, the biggest buyer of Iranian crude, will bow to Washington's pressure.


Beyond sanctions, the escalating trade dispute between and was weighing on global markets.

On a weekly basis, Brent is set for a 1.5 percent fall, while WTI is heading for a drop of around 2.5 percent.

"The market seems to be focused on fears of reduced demand from China, partially due to the effects of the trade wars between and the United States," said William O'Loughlin, at Australia's

In the latest round, said it would impose additional tariffs of 25 percent on $16 billion worth of U.S. imports.

Although crude was dropped off the list, replaced by refined products, many analysts say Chinese imports of American crude will still drop significantly.

"Already we are hearing that Chinese refiners are holding back on U.S. crude, despite escaping tariffs," said in a note on Friday.

Growing global trade tensions have also led to a slump in the currencies of emerging economies such as India, and China.

These devaluations have made imports of oil, which is traded in U.S. dollars, more expensive, potentially denting demand.

"The devaluation of many emerging market currencies relative to the U.S. dollar means that in is higher than what we see on the screen," U.S. investment Jefferies said on Friday.

(Reporting by Gloystein in Singapore; Additional reporting by in Houston; Editing by and Richard Pullin)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, August 10 2018. 10:33 IST