Thursday, September 12, 2019
Donald Trump is stirring up the oil market again as a move to delay the next tariff increase on China pushed prices higher after they tumbled on signs he’s prepared to ease sanctions against major producer Iran.
(Bloomberg) — Donald Trump is stirring up the oil market again as a move to delay the next tariff increase on China pushed prices higher after they tumbled on signs he’s prepared to ease sanctions against major producer Iran.
Futures added as much as 1.1% in New York after falling 2.9% on Wednesday, the biggest drop in four weeks. Trump said he was postponing the imposition of extra tariffs on Chinese goods by two weeks, offering a glimmer of hope for global demand. The U.S. President discussed moderating penalties on Iran at the Oval Office on Monday to help secure a meeting with his counterpart Hassan Rouhani later this month, according to three people familiar with the matter.
Oil is down about 15% from its peak in April as the prolonged U.S.-China trade spat dents the outlook for global demand. An easing of the standoff with Iran could bring back around 700,000 barrels a day of crude from the OPEC producer, possibly by the first quarter, RBC Capital Markets said this week after the ouster of hawkish U.S. National Security Adviser John Bolton.
The tariff delay suggests “Trump can be flexible to get concessions from China and that he’s not trying to punish Beijing at any cost,” said Jun Inoue, a senior economist at Mizuho Research Institute Ltd. in Tokyo. OPEC and its allies would have to send a message to the market they will deepen production cuts if Iran’s output climbs, Inoue said.
West Texas Intermediate crude for October delivery rose 36 cents, or 0.7%, to $56.11 a barrel on the New York Mercantile Exchange as of 7:30 a.m. in London. The contract fell $1.65 to $55.75 on Wednesday, the lowest close since Sept. 3.
Brent for November settlement gained 35 cents, or 0.6%, to $61.16 a barrel on the ICE Futures Europe Exchange. The contract decreased $1.57 to $60.81 on Wednesday. The global benchmark traded at a $5.12 premium to WTI for the same month.
Increased tariffs on $250 billion of Chinese goods will be delayed until Oct. 15 from Oct. 1 as a gesture of goodwill after Vice Premier Liu He made the request, and due to the nation celebrating its 70th Anniversary on Oct. 1, Trump said via Twitter. The International Energy Agency this week cut its forecast for global oil demand growth again, blaming the U.S.-China dispute.
The White House has started preparations for Trump to meet with Rouhani in New York on the sidelines of the annual United Nations General Assembly the week of Sept. 23, according to the people familiar. Trump told reporters, “we’ll see what happens,” after he was asked about backing off the sanctions.
To contact the reporter on this story:
Tsuyoshi Inajima in Tokyo at [email protected]bloomberg.net
To contact the editors responsible for this story:
Serene Cheong at [email protected]
Ben Sharples, Andrew Janes
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