On Tuesday, the 6th of August 2019, both US and UK crude slid more than 2 percent, while UK crude had been hovering near its seven-month lows, as trade tensions alongside geopolitical bubbles had disdained efforts of OPEC+ to cut output by 1.2 million barrels per day.
Meanwhile, underscoring significance of a global scale slowdown linked to US-China trade abrasion, Iran’s latest threat to jeopardize oil supply through the strategically critical Strait of Hormuz had failed to uplift crude oil price.
On Tuesday’s (August 6th) market wrap-up, UK crude was slumped 2.40 percent to settle at nearly seven-month lows to $58.60 per barrel, while US West-Texas Intermediate crude futures was knocked down 2.87 percent to $53.60 a barrel on Tuesday’s (August 6th) market wind down.
In point of fact, latest downcast move of crude oil was largely goaded by an abrupt escalation of Sino-US trade war that came barking out of the blue without any prior notice on last Thursday (August 1st), when US President Donald Trump had hiked tariff further on $300 billion worth of Chinese imports, rekindling fear of a further slowdown of global economy.
Meanwhile, citing that China has better alternative to US and UK crude amid an escalated trade war that might weigh on crude oil prices to drown below $40/barrel, and could as well look to purchase Iranian heavy crude at much-lower price, since a US sanction should not be subject to other global crude oil buyers, a Commerzbank analyst Carsten Fritsch wrote in a client note, “As far as the oil market is concerned, there are two key questions: 1) Why should China carry on buying U.S.
crude oil? and 2) Why should China continue to adhere to the U.S. sanctions when it comes to buying Iranian oil?”