Crude Price Suffers Over US-China Trade War


Crude Price Suffers Over US-China Trade War

Andrew Cummings
August 5, 2018

The oil market has been speculating about how much of Iran's exports could be eroded by the US sanctions, with analysts from BMI Research to Mizuho Securities predicting that China might boost its imports of cheap supplies from the state and offset cuts by other nations.

While the USA failed to persuade Beijing to stop importing Iranian oil, the Chinese government did say it would not increase the imports, according to Bloomberg, which cited two anonymous officials "familiar with the negotiations".

Recall that President Hassan Rouhani of Iran had earlier warned the U.S. against any attempt to stop Tehran's oil trade.

Saudi Arabia, Russia, Kuwait and the UAE have increased production to help to compensate for an anticipated shortfall in Iranian crude supplies once planned United States sanctions take effect later this year.

U.S. President Donald Trump pulled out of the 2015 deal in May.


Trump made that much known in a Twitter post days ago during a joint White House news conference with Italian Prime Minister Giuseppe Conte. However, only 13 planes have been delivered since sanctions on Iran were lifted under the nuclear pact.

China is Iran's top oil importer.

Washington chose to reimpose sanctions and has told other countries they must halt all imports of Iranian oil from November 4 or face United States financial measures.

Another expert who foresees tightening was far more outspoken in his short-term forecast: Stephen Brennock, oil analyst at PVM Oil Associates, stated in a note on Friday that "Venezuela's ticking time bomb together with the return of Iran's oil industry to the sanctions era has all the makings for a major supply shock".

Tensions between Washington and Beijing show no signs of easing, with the Asian giant announcing Friday that it has prepared a list of US$60 billion worth of U.S. goods to hit with tariffs in retaliation for duties proposed by the Trump administration.


The U.S. military's Central Command on Wednesday confirmed it has seen an increase in Iranian naval activity, including in the Strait of Hormuz, a strategic waterway that Iran's Revolutionary Guards have threatened to block.

Sanctions will also be reapplied to USA imports of Iranian carpets and foodstuffs and on certain related financial transactions.

When pressed by CNBC to answer the questions she was raising, Croft replied, "I think this market will tighten at the end of this year", and added that Venezuelan production continues to fall and will be a contributing factor.

What's next for Iran oil?

State refiners accounted for about four-fifths of the imports; Indian Oil Corp along with its unit Chennai Petroleum Corp imported approximately 300 000 bpd oil, the preliminary data showed.


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