Oil prices fall on emerging market woes, looming tariff deadline

Brent crude oil prices dipped on Monday amid rising supply from OPEC and the United States, although expectations of falling Iranian output once US sanctions bite from November provided some support.

The Brent crude oil - the global benchmark for oil prices - was trading at $78.01 per barrel, however, closed trading at $79.38 per barrel.

The ongoing trade wars between the U.S. and some of the world's biggest economies, including the European Union and China, could hurt the demand for oil if they aren't settled soon.

The Trump administration has also threatened to impose "secondary sanctions" on the countries which will not follow its diktat on oil import embargo.

Iran has in the past repeatedly threatened to block the Strait of Hormuz - which is used by its Gulf rivals including Saudi Arabia - when faced with sanctions on its oil exports and possible military action by the US.

President Hassan Rouhani said Tuesday that Iran will continue exporting crude oil despite US efforts to stop it through sanctions.

The Iranian public has also been vocal about the weakening economy with protestors hitting more than 80 urban centres in the country, which has led to several deaths. Monday trades will be booked Tuesday because of the USA holiday.

USA oil prices edged up on Tuesday, rising back past $70 per barrel, after two Gulf of Mexico oil platforms were evacuated in preparation for a hurricane. In fact, the U.S. has increased oil production by 30% since the middle of 2016 to its current rate of 11 million barrels of oil per day. The contract gained 1.6 percent last week.

But Trump's attack on cheap Chinese imports, and his decision to impose trade tariffs on a wide range of Chinese goods entering the USA, could damage China's economic growth and in turn lower its demand for oil.

"With ship-tracking data now pointing at a reduction in Iranian exports, renewed strife in Libya, and Venezuelan export availability hobbled by an accident at the key Jose terminal, the list of bullish headlines is getting longer", said Michael Dei-Michei, head of research at Vienna consultancy JBC Energy.

The crude market is placing more importance on a stronger dollar and a potential Cushing, Oklahoma, stockpile build than on Tropical Storm Gordon's threats to oil assets.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $69.81 per barrel, virtually unchanged from their last settlement.

BNP Paribas expects Brent to average $79 per barrel in 2019.

  • Eleanor Harrison