Brent crude slipped below $77/bbl on July 6, under pressure from higher Saudi production and trade tensions between the U.S. and China, despite support from oil supply disruptions.
Top exporter Saudi Arabia told OPEC it raised oil output by almost 500,000 barrels per day (bbl/d) last month, OPEC sources said, a sign Riyadh wants to make up for shortages elsewhere and dampen prices.
Brent crude, the global benchmark, was down 76 cents at $76.63/bbl by 1313 GMT. WTI slipped 65 cents to $72.29.
"On the bearish side both Saudi Arabia and Russia are living up to their promise to increase output," said Tamas Varga of oil broker PVM. "Looming U.S. sanctions on Iran, however, are causing serious concerns amongst market players."
U.S. tariffs on $34 billion in Chinese imports took effect as a deadline passed on Friday and Beijing has vowed to respond immediately in kind, setting the two world's biggest economies on a path towards a full-blown trade conflict.
"The U.S.-China trade dispute is set to intensify as neither side is prepared to back down," said Abhishek Kumar, senior energy analyst at Interfax Energy.
A U.S. government report also weighed on prices this week, showing crude stockpiles rose by 1.3 million barrels, while analysts had forecast a decline.
The potential trade war between the U.S.and China comes amid a tight oil market.
Oil output cuts by OPEC and allies including Russia since January 2017 have reduced a glut of crude.
Involuntary drops in supply in Venezuela, Angola and Libya have made the cutbacks even bigger, although OPEC has now started to ease those curbs with Saudi Arabia pumping more.
Even so, renewed U.S. sanctions on Iran against its oil exports look set to tighten supply further.
South Korea, a major buyer of Iranian oil, will not lift any in July for the first time since August 2012, three sources familiar with the matter said on July 6.
Saudi Arabia on July 5 cut August prices of its Arab Lightgrade crude exports. The move appeared related to President Trump's tweets, said Stewart Glickman, energy equity analyst at CFRA Research in New York.
Washington's plans to reimpose sanctions against Iran,OPEC's No. 3 producer, have boosted oil prices analysts said.
On July 4, an Iranian Revolutionary Guards commander said Tehran might block oil shipments through the Strait ofHormuz.
"Roughly 30% of all seaborne oil is transported through this strait every day," Commerzbank said in a note, adding a blockade would have "dramatic consequences for global oil supply and an impact on prices that is almost impossible to put into figures."
Recommended Reading
Oceaneering Won $200MM in Manufactured Products Contracts in Q4 2023
2024-02-05 - The revenues from Oceaneering International’s manufactured products contracts range in value from less than $10 million to greater than $100 million.
E&P Highlights: Feb. 5, 2024
2024-02-05 - Here’s a roundup of the latest E&P headlines, including an update on Enauta’s Atlanta Phase 1 project.
CNOOC’s Suizhong 36-1/Luda 5-2 Starts Production Offshore China
2024-02-05 - CNOOC plans 118 development wells in the shallow water project in the Bohai Sea — the largest secondary development and adjustment project offshore China.
TotalEnergies Starts Production at Akpo West Offshore Nigeria
2024-02-07 - Subsea tieback expected to add 14,000 bbl/d of condensate by mid-year, and up to 4 MMcm/d of gas by 2028.
US Drillers Add Oil, Gas Rigs for Third Time in Four Weeks
2024-02-09 - Despite this week's rig increase, Baker Hughes said the total count was still down 138 rigs, or 18%, below this time last year.