Traders on Monday reported marginal drop in oil prices over concerns that a US-China trade dispute will erode global economic growth, although looming U.S. sanctions against Iran’s oil sector kept crude from falling significantly during trading across markets
International Brent crude oil futures were at $75.75 per barrel, dropping 7 cents from their last close, while the U.S. West Texas Intermediate (WTI) crude futures were down 9 cents at $68.63 a barrel.
With the drop in the price of Brent crude oil (against which the Nigerian crude oil is bench-marked) futures, Nigeria’s crude oil earnings are expected to dip. This is even against the backdrop of declining output of the oil sector in recent months.
Commenting on the sliding international oil prices, Head of Trading for Asia/Pacific at futures brokerage OANDA in Singapore, Stephen Innes, noted that “falling U.S. rig counts and last week’s decline in U.S. inventories are supporting oil prices amid a protracted U.S.-China trade war that could dampen global growth and weigh on oil demand.”
Energy Services firm, Baker Hughes, had on Friday reported that U.S. energy companies cut nine oil drilling rigs last week, dropping to 860, the biggest reduction since May 2016.
The company noted however that “despite growing concerns about potential oversupply, the markets will continue to get a fillip from U.S. sanctions against Iran.”.
While Washington will target Iran’s oil exports with sanctions from November, Iran, an Organization of Petroleum Exporting Countries (OPEC) member, has exported around 2.5 million barrels per day of crude oil so far this year.
Most industry analysts expect this figure to fall by at least 1 million barrels per day (bpd) once the US sanctions kick in.