Oil markets slipped on Tuesday as the latest escalation in the Sino-U.S. trade war clouded the outlook for crude demand from the two countries, the world’s top crude consumers.
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Brent crude futures had dropped 29 cents, or 0.37 percent, to $77.76 per barrel by 0632 GMT.
U.S. West Texas Intermediate (WTI) crude was down 15 cents, or 0.22 percent, at $68.76 per barrel.
U.S. President Donald Trump on Monday said he would impose 10 percent tariffs on about $200 billion worth of Chinese imports.
“The growing trade dispute has hurt trading sentiment. The impact on economic growth is slowly dripping in, which again hurts oil prices,” Wang Xiao, head of crude research at Guotai Junan Futures, said on Tuesday.
Refineries in the United States consumed about 17.7 million barrels per day (bpd) of crude oil last week, while China’s refiners used about 11.8 million bpd in August, according to government data from the countries.
The tariffs are likely to limit economic activity in both China and the United States, potentially hitting growth in demand for oil as less fuel is consumed to move goods for trade.
The countries are the world’s two largest economies.
However, potential supply cuts caused by U.S. sanctions on Iran, the third-largest producer among the members of the Organization of the Petroleum Exporting Countries (OPEC), are providing some support for oil prices.
Sanctions affecting Iran’s petroleum sector will come into force from Nov. 4.
Meanwhile, oil output from seven major U.S. shale formations is expected to rise by 79,000 bpd to 7.6 million bpd in October, the U.S. Energy Information Administration said on Monday.
Technical analysis from Reuters market analyst Wang Tao showed that U.S. oil prices have repeatedly failed to overcome a resistance level of $69.85 per barrel, signaling a dissipation of positive outlook.
Brent may fall more than $1 to $76.37 a barrel, while WTI crude prices may revisit their Sept. 14 low of $67.94, he wrote.
On Monday, Russia’s Energy Minister Alexander Novak said that OPEC and non-OPEC members would discuss all possible supply scenarios when they meet this month in Algeria. Russia, the world’s largest oil producer, and other producers in OPEC have kept in place a supply agreement to maintain prices while at the same time providing enough oil to the market.
OPEC Secretary General Mohammad Barkindo said on Tuesday that OPEC and non-OPEC countries aim to agree a framework for long-term cooperation by December, when the oil producers plan to meet in Vienna.
(Reporting by Meng Meng and Aizhu Chen in BEIJING, additional reporting by Roslan Khasawneh in SINGAPORE Editing by Joseph Radford and Christian Schmollinger)