Oil markets tense as USA and China on brink of trade war

India’s oil imports from Iran surged after US sanctions were lifted in 2015

India’s oil imports from Iran surged after US sanctions were lifted in 2015

President Trump's war of words with Opec escalated today as Iran claimed that his tweets complaining about high oil prices had pushed prices up even further.

Ship brokerage Banchero Costa said Iran's crude oil production was now around 3.8 million barrels per day (bpd), but added "there is the risk of production decreasing going forward as exports are again affected by renewed sanctions implemented by the USA".

That may reduce the pressure on Saudi Arabia to keep oil prices high, said John Kilduff, partner at energy hedge fund Again Capital LLC in NY.

In a Twitter tirade yesterday, Mr Trump urged the Organisation of the Petroleum Exporting Countries (OPEC) to stop manipulating oil prices. Iran is OPEC's third biggest oil producer, and other OPEC members range from Iran, Saudi Arabia, Kuwait and the United Arab Emirates in the Middle East to Venezuela and Ecuador in South America.

Brent for September settlement slid 67 cents to US$77.57 a barrel on the London-based ICE Futures Europe exchange. You impose sanctions on major producers, founders of OPEC.

Trump's OPEC tweets come as gasoline prices are more than 60 cents a gallon higher than a year ago. The global benchmark traded at a $6.84 premium to WTI for the same month.

"Because it's driving season, you expect a lot of crude to go through refineries right now - so that's why we were looking for a draw", said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.

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The UAE on Tuesday said it will increase production by 0.2 million barrels per day to 3.5mbpd by the end of 2018 to help meet any oil shortage and will also adhere to the conformity level.

Iran has threatened to block oil exports through a key Gulf waterway in retaliation against any hostile U.S. action.

High gasoline prices are no help to US presidents, especially if their approval ratings are already shaky, according to Washington-based consultant ClearView Energy Partners. "We are also on this highway".

Futures dropped as much as 1.7% in NY following a government report showing U.S. crude inventories climbed 1.25 million barrels last week as imports rose and exports fell.

According to Commerzbank, OPEC now has just enough oil to meet global demands without Iran's supply.

"OPEC has not defined oil prices for the past 30 years", Kazempour said. Additionally, about 300,000 bpd of Libyan oil has been taken off the market.

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