Trade conflict puts pressure on oil, but sanctions provide a floor

Singapore — Oil prices dipped on Friday amid the concern that the trade war between the US and China could intensify, although looming US sanctions against Iran’s oil exports prevented markets from falling further.

International Brent crude oil futures were at $77.70 a barrel at 2.32am GMT, down 7c from their last close.

US West Texas Intermediate (WTI) crude futures were down 3c at $70.22 a barrel.

Still, with Venezuelan supply falling sharply and the concern around US sanctions against Iran that will target its oil exports from November, crude markets in August are on track to post a more than 4% rise for Brent and a 2% increase for WTI.

In a sign of a tightening market, the amount of unsold crude stored in the Atlantic basin has dwindled from about 30 cargoes to just a handful in recent weeks, trade data showed.

Despite this, analysts cautioned that the trade disputes between the US and other major economies, especially China and the EU, could start to drag on economic growth and, by extension, fuel demand.

“You have to wonder if it [crude] can sustain these prices in a world where President [Donald] Trump doubles down on his battle with the EU and China at the same time,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.