Oil prices drop as escalating trade war clouds demand outlook

Oil prices drop as escalating trade war clouds demand outlook

Russian Federation says it's ready to talk with the US on how to maintain global oil market balance.

U.S. West Texas Intermediate (WTI) crude CLc1 gained 94 cents to settle at $69.85 a barrel, a 1.4 percent increase.

Brent crude futures had declined 27 cents, or 0.35 percent, to $77.78 per barrel by 0054 GMT.

The upcoming deadline for US sanctions on Iranian oil and gas exports to come into effect in November could prove a challenge to global supply stability and reserves, particularly if there are any other significant outages in the system at the same time, according to the IEA.

Ministers from OPEC and non-OPEC producers meet this coming Sunday to discuss compliance with output policies.

According to reports, Iran's crude exports are already falling as the USA prepares to curb Tehran's ability to sell oil and participate in global financial markets.

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Saudi officials were careful to avoid pinpointing a price target in their conversations, saying that while the kingdom has no desire to push prices higher than $80 a barrel, it may no longer be possible to avoid it.

With Iran's crude sales falling due to the US sanctions and countries such as Venezuela struggling to avoid outright economic collapse, it was perhaps inevitable that Mohammad Barkindo, secretary general for the Organization of the Petroleum Exporting Countries (OPEC), would tell Reuters that his cartel will keep working with other oil producers to manage global supplies in the face of demand for crude facing "headwinds".

OPEC members received approximately US$567 billion in net oil export revenues in 2017, up 29% from revenues in 2016, according to the US Energy Information Administration (EIA).

Russian Energy Minister Alexander Novak said an oil price between $70 and $80 was temporary and sanctions-driven, adding the long-term price would stand around $50 a barrel.

Oil markets fell on Tuesday as the latest escalation in the China-US trade war clouded the outlook for crude demand from the two countries, which are the world's top two oil consumers. Meanwhile, an industry report Tuesday showed US crude stockpiles increased 1.25 million barrels last week, defying expectations for a decline ahead of government data Wednesday. The move was in retaliation for President Donald Trump's planned levies on $200 billion worth of Chinese goods. "It may also suggest they don't have the ability to make up for the losses that are already stemming from impending US sanctions on Iran".

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