Published: Sat, July 14, 2018
Business | By Kate Woods

The Trump Effect, Crude Oil Prices Fall Across the Board

The Trump Effect, Crude Oil Prices Fall Across the Board

Brent crude dropped 6.9% - the biggest decline in more than two years - to end at $73.40 a barrel for the global benchmark.

The sell-off began early in the session after Libya's National Oil Company said it would reopen ports which had been closed since late June.

The United States pulled out of a multinational deal in May to lift sanctions against Iran in return for curbs to Tehran's nuclear programme.

"While China could secure the crude from alternative sources, such as West Africa which has a similar quality to US crude, the USA would find it hard to find an alternative market that is as big as China", Suresh Sivanandam, senior manager, Asia refining, at Wood Mackenzie, said last month, commenting on the impact of possible Chinese tariffs on USA oil imports. Higher oil prices tend to increase trade deficits, as more money is paid for foreign oil. As crude oil is now in a bull market, concerns regarding supply have a significant influence on price.

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On Tuesday, Sec. Pompeo seemed to strike a different tone. "In our meeting with the Saudi energy minister, we discussed maintaining a well-supplied oil market to guard against volatility", the unnamed official told reporters, according to Reuters. -Chinese trade war-are set to reshuffle the US oil flows to the world's fastest-growing oil market, Asia. "We talked about minimizing market disruptions and helping partners find alternatives to Iranian supply of oil".

Fears that a U.S.

Iranian oil shipments to some USA allies are being threatened even before America's Nov 4 deadline for buyers to curb imports and comply with renewed sanctions on the Opec member.

In addition, in a report published on Wednesday, OPEC downplayed concerns about whether or not it could handle the tightening oil market.

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The United States is poised to become the world's top oil producer by 2019, with experts predicting America is set to create a whopping 11.8 million barrels per day by June of next year.

Even if demand remains strong, OPEC production will be more than enough to satisfy the market. A further escalation of trade disputes could depress demand for oil from China and elsewhere.

Oil prices fell along with stock markets and other commodities after the Trump administration threatened tariffs on another $200 billion in Chinese goods. The tariffs are only proposed, for now, and wouldn't take effect for two months.

China was the world's biggest oil importer a year ago, followed by the US.

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If proposed USA tariffs on Chinese goods go into effect, duties will cover almost half of all American imports from the Asian nation.

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