Oil rises on Iran’s new nuclear threats

Andrew Cummings
July 10, 2019

Oil prices rose on Wednesday, led by US crude after an industry group reported that USA stockpiles fell for a fourth week in a row, alleviating concerns about oversupply amid global trade tensions.

It attributed the revision to lower-than-expected global fuel consumption and weakening economic growth, citing "increasing uncertainty" and "increasingly weak global economic signals". -China trade dispute that has been dragging down the global economy and oil demand.

OPEC, Russia and other non-OPEC members, a grouping known as OPEC+, agreed this month to extend their oil supply cut by 1.2 million bpd (barrels per day) until the end of March 2020.

Oil prices were propped up as market participants were anxious that the heightening geopolitical tensions in the Middle East may disrupt oil flows. U.S. West Texas Intermediate crude settled up 17 cents to $57.83. Meanwhile, traders continued to fret over global economic slowdown, which would impact oil demand, experts noted. Currently, a trade deal is nowhere in sight, but the two biggest economies in the world have at least made a decision to resume trade talks.

The White House said in April that tightening sanctions on Iran will have "no material impact" on oil prices given the large supply of United States oil on the global market.

In the previous week ending June 28, API reported a decrease of 5 million barrels of crude oil inventories, while the US Energy Information Administration (EIA) reported a decline of 1.1 million barrels for the same period, the Xinhua news agency reported. But more importantly, because market participants are now more concerned about the state of the global economy-particularly in a still unresolved U.S. 'President Trump wants to be re-elected and will therefore be prepared to sign a trade deal, probably in 4Q, that doesn't necessarily meet all of his initial demands, ' says Mark Cliffe, Chief Economist and Head of Global Research of the ING Group.

Russian oil output fell close to a three-year low in early July, industry sources told Reuters.

"The Russian story definitely supports prices today".

Iran's state TV recently aired a program showing an Iranian-flagged tanker under USA sanctions that delivered one million barrels of crude oil to China, one of the remaining partners to the nuclear deal and which has rejected Washington's efforts to cut Tehran's oil exports to zero. The first weekly supply report is due at 4:30 p.m. EDT (2030 GMT) from the American Petroleum Institute, an industry group, followed by the EIA on Wednesday morning.

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