EU and US could reach trade deal this weekend - Reuters
Investing.com-- Oil prices fell Thursday, adding to the week’s steep losses earlier this week on concerns over increasing supply and worsening demand, with new U.S. sanctions on Iran offering some price support.
At 08:50 ET (12:50 GMT), Brent oil futures for July fell 1% to $60.44 a barrel, while West Texas Intermediate crude futures dropped 1.1% to $57.58 a barrel.
Trading volumes were muted on account of Labor Day holidays across the globe, but both benchmarks were trading around 8% lower so far this week.
Demand fears spark steep oil losses
Oil prices were nursing steep losses this week, weighed by concerns over demand growth, especially after gross domestic product data showed the U.S. economy, the largest in the world, shrank in the first quarter.
The GDP contraction was largely linked to uncertainty over Trump’s trade and economic agenda, and was yet to reflect the full impact of Trump’s steep trade tariffs - especially a 145% duty on China.
Weak purchasing managers index data from China also weighed, given that it showed a contraction in manufacturing activity in April. This was largely attributed to Trump’s tariffs.
China is the world’s biggest oil importer, with more economic headwinds for the country being a major pain point for oil markets.
OPEC+ meeting looms large
On the supply side of the occasion, the Organization of Petroleum Exporting Countries and allies, known as OPEC+, is set to meet early next week to decide a June output plan.
Reuters reported that Saudi Arabia, the de facto leader of the group, is unwilling to prop up the oil market with supply cuts, suggesting that the cartel will accelerate output hikes in June for a second consecutive month.
U.S. sanctions more Iran oil ahead of nuclear talks
Elsewhere, the U.S. on Wednesday imposed more sanctions against entities it alleged were involved in the illegal trade and transport of Iranian oil, likely putting more pressure on Tehran before a new round of negotiations on Iran’s nuclear plans this week.
The U.S. State Department said it was imposing sanctions on seven entities spread across the United Arab Emirates, Turkey, and Iran, which it said were trading Iranian oil and oil products.
The move is aimed at further limiting Iran’s ability to sell oil- its key export, and presents more economic pressure on the country.
But the new sanctions also stand to reduce global oil supplies, offering markets some relief amid heightened concerns over slowing demand and increasing supplies elsewhere.
Still, any positive developments in U.S.-Iran talks could see the eventual scaling back of sanctions against Tehran, freeing up its oil supplies.
(Ambar Warrick contribued to this article.)