OIL prices rose yesterday after new sanctions were imposed on Iran’s crude exports but were on track for a third straight week of decline, hurt by US President Donald Trump’s renewed trade war on China and threats of tariffs on other countries.
Brent crude futures were up 51 cents, or 0.7 per cent, at $74.80 a barrel yeterday, but were poised to fall 2.6pc this week. US West Texas Intermediate crude rose 48 cents, or also 0.7pc, to $71.09 a barrel, down 2.1pc on a weekly basis.
The US Treasury said on Thursday it was imposing new sanctions on a few individuals and tankers helping to ship millions of barrels of Iranian crude oil per year to China, in an incremental move to increase pressure on Tehran.
“Trump has talked about maximum pressure (on Iran). The market takes that quite seriously,” said Michael Haigh, global head of commodities research at Societe Generale. The French bank projects that Iranian oil exports are set to halve.
“The imposition of tariffs and the pauses should be bullish for the oil market because it adds uncertainty. But you haven’t seen this response because of demand concerns. Tariffs and tit for tat responses from nations, it hurts global GDP ... and oil demand,” Haigh added.
Trump had announced a 10pc tariff on Chinese imports as part of a broad plan to improve the US trade balance, but suspended plans to impose steep tariffs on Mexico and Canada.
“Downside pressure has stemmed from the news flow around tariffs, with concerns over a potential trade war fueling fears of weakening oil demand,” analysts at BMI said in a note yesterday.
Oil prices settled lower on Thursday after Trump repeated a pledge to raise US oil production, unnerving traders a day after the country reported a much bigger-than-anticipated jump in crude stockpiles.
The benchmarks were also under pressure from swelling US crude inventories, which rose sharply last week as demand softened on ongoing refinery maintenance.
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