London – Oil prices fell on Tuesday as renewed doubts over US-China trade talks stoked jitters over global growth, but losses were tempered by a US military deployment to the Gulf to deter Iran.
Brent crude oil futures were at $70.84 per barrel at 8.50am GMT, 40 US cents or 0.56% below their last close.
US West Texas Intermediate crude futures were at $61.97 per barrel, down 28c or 0.45%.
US President Donald Trump said on Sunday he would raise tariffs on $200bn worth of Chinese goods from 10% to 25% by Friday, comments that dragged down Asian and US stock markets.
“The US has been losing, for many years, $600bn-$800bn a year on trade. With China we lose $500bn. Sorry, we’re not going to be doing that anymore!” Trump tweeted on Monday.
On the supply side, oil markets remain tense as the US has tightened sanctions on Iranian oil exports and plans to bulk up its forces in the world’s top oil-exporting region.
US officials announced on Sunday that the movement of the Abraham Lincoln carrier strike group and a bomber task force towards the Middle East was meant to counter “credible threats”, but Tehran dismissed the move as “psychological warfare”.
US sanctions have already halved Iranian crude exports over the past year to below one-million barrels per day (bpd), and shipments to customers are expected to drop to as low as 500,000 bpd in May as sanctions tighten.
Washington has also placed sanctions on oil exports from Venezuela, a founding member of oil cartel Opec.
Goldman Sachs said “the recent Brent pullback has taken prices too low in the face of tight fundamentals and growing supply risks, just as refiners come back from extended spring turnarounds”.
The US bank said “we therefore expect a near-term Brent rebound”, although it added that “beyond the next couple months … all these supply and demand cross-currents will dissipate to bring a balanced global oil market, once new [US] Permian transport capacity is online and core-Opec ramps up”.
Bank of America Merrill Lynch said it expected Saudi Arabia “to bring back oil production slowly as Iranian barrels exit the market”, adding that it saw Brent having a floor at $70 per barrel in current market conditions.