Front-month US West Texas Intermediate crude futures were at $69.28 per barrel early on Wednesday, up 11 cents from their last settlement.
The market has become volatile as concerns over political threats to supplies, such...
China's crude imports recovered slightly in July after two straight monthly declines, but remained low due to a drop-off in demand from smaller independent refineries.
Sen added that Iranian production falling by 1.5 million bpd by year end could wind up being a conservative figure, and Bank of American Merrill Lynch pointed out in a research note that "for every 1 million bpd imbalance, we see a price impact on Brent of around $17".
All the Persian Gulf oil exporters such as Saudi Arabia, Iran, Iraq, Kuwait, Qatar, the UAE, and Bahrain, ship their crude oil to the worldwide market through the Strait of Hormuz.
Germany warns United States sanctions on Iran could 'boost radical forces'
Tuesday's sanctions target Iran's purchases of USA dollars, metals trading, coal, industrial software and the auto sector. Stopping US trade and killing 100K US jobs is fine with us, but the world won't follow impulsive tweeted diktats.
The crude futures that China launched in March with ambitions to rival USA and European benchmarks seem to be dancing to an oil-market tune only they can hear. "The US decision to pull out of the Joint Comprehensive Plan of Action has been known since May, so the market has had time to price in reduced Iranian output - probably of about one million barrel per day (bpd) - into oil prices", analysts at Capital Economics said. The official selling price for Oman crude oil during July 2018, for the delivery month of September 2018, settled at US$73.17, lower by US$0.44 only compared with June trading prices.
"Oil had been largely immune from the escalating trade dispute, however the recent application of tariffs by China on United States petroleum products does represent a step change for the energy market", said Daniel Hynes, a Sydney-based analyst at Australia & New Zealand Banking Group Ltd.
French bank Societe Generale said that while there was now "comfortable supply in the physical crude markets..." Starting in July, South Korea is halting Iranian oil imports for the first time since 2012 amid pressure from the United States to discontinue purchases from Iran.
On top of the impact on the broader global economy, there is growing worry in the crude oil market about Chinese demand.
"Past instances of El Nino have resulted in sharp drops in USA residential and commercial heating oil demand and prices", it said. They said Iranian exports were likely to drop by up to 1-million bpd by November, but even that could push Brent to $85 a barrel if oil markets were hit by other disruptions in producer countries such as Libya or Venezuela.
Traders were also scrutinizing weekly data on US crude stockpiles, which showed inventories fell by 1.4 million barrels in the week through August 3.
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