Oil posted a weekly decline as the escalating US-China trade dispute and swelling US stockpiles overshadowed tanker attacks in the Middle East.
Futures settled up 0.4 percent in New York on Friday, but still closed the week down 2.7 percent.
London-traded contracts slid for a fourth straight week.
Photo: AFP / Tasnim
The White House blamed Iran for tanker attacks near the Strait of Hormuz, the biggest global chokepoint for oil flows.
Meanwhile, the International Energy Agency said global supplies would swamp demand next year, further pressuring OPEC.
US crude stockpiles last week climbed to their highest since July 2017, sending futures to the lowest in almost five months.
The accumulation of excess supply runs counter to seasonal trends and adds to anxiety over the demand implications of the trade dispute, said Bill O’Grady, chief market strategist at Confluence Investment Management LLC in St Louis, Missouri.
“We’re seeing a backup in inventory, but what’s really crippling the market are demand concerns,” O’Grady said. “There is a negative effect for the world economy from the trade tensions.”
The market’s muted reaction to the tanker attacks might be because “there’s no way” Iran could fully halt the flow of crude through the Strait of Hormuz, said Michael Hiley, head of over-the-counter energy trading at LPS Futures in New York.
“A couple of mines on boats that are carrying things other than crude oil, is that really going to stop the flow of crude?” he said.
While a war in the Middle East would disrupt energy flows, the region is less important for global crude markets than it was a couple of decades ago due to the rise of US shale production.
Unless the situation escalates dramatically, the prospect of a prolonged trade spat between the US and China — the world’s two biggest economies — probably remains the key price driver.
West Texas Intermediate (WTI) for July delivery on Friday closed up US$0.23 at US$52.51 a barrel on the New York Mercantile Exchange, down 2.74 percent for the week. Prices have advanced 16 percent year to date.
Brent for August settlement rose US$0.70 to US$62.01 on London’s ICE Futures Europe exchange, down 2 percent for the week.
The global benchmark crude on Friday traded at a US$9.24 premium to WTI for the same month.
US officials released images that they said show Iran was involved in Thursday’s attacks on the tankers.
British Secretary of State for Foreign and Commonwealth Affairs Jeremy Hunt said the incidents posed a serious danger to the region and that it was almost certain that Iran’s Islamic Revolutionary Guard was involved.
With an approval rating of just two percent, Peruvian President Dina Boluarte might be the world’s most unpopular leader, according to pollsters. Protests greeted her rise to power 29 months ago, and have marked her entire term — joined by assorted scandals, investigations, controversies and a surge in gang violence. The 63-year-old is the target of a dozen probes, including for her alleged failure to declare gifts of luxury jewels and watches, a scandal inevitably dubbed “Rolexgate.” She is also under the microscope for a two-week undeclared absence for nose surgery — which she insists was medical, not cosmetic — and is
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
GROWING CONCERN: Some senior Trump administration officials opposed the UAE expansion over fears that another TSMC project could jeopardize its US investment Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating building an advanced production facility in the United Arab Emirates (UAE) and has discussed the possibility with officials in US President Donald Trump’s administration, people familiar with the matter said, in a potentially major bet on the Middle East that would only come to fruition with Washington’s approval. The company has had multiple meetings in the past few months with US Special Envoy to the Middle East Steve Witkoff and officials from MGX, an influential investment vehicle overseen by the UAE president’s brother, the people said. The conversations are a continuation of talks that
CHIP DUTIES: TSMC said it voiced its concerns to Washington about tariffs, telling the US commerce department that it wants ‘fair treatment’ to protect its competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reiterated robust business prospects for this year as strong artificial intelligence (AI) chip demand from Nvidia Corp and other customers would absorb the impacts of US tariffs. “The impact of tariffs would be indirect, as the custom tax is the importers’ responsibility, not the exporters,” TSMC chairman and chief executive officer C.C. Wei (魏哲家) said at the chipmaker’s annual shareholders’ meeting in Hsinchu City. TSMC’s business could be affected if people become reluctant to buy electronics due to inflated prices, Wei said. In addition, the chipmaker has voiced its concern to the US Department of Commerce
RSS