'US to become global leading producer of crude oil'

Oil slides below $70 as a dispute over Libya's ports ends

Oil slides below $70 as a dispute over Libya's ports ends

USA crude fell 5% to $70.38 a barrel - its worst one-day decline in a year.

Another factor pushing down oil prices midweek were the comments from U.S. Secretary of State Mike Pompeo, who seemed to soften America's position as it relates to how severely it would treat countries buying Iranian oil.

If the proposed $200 billion in tariffs go into effect, duties implemented by the administration aimed squarely at China will cover almost half of all U.S. imports from the Asian nation. Venezuela's production has collapsed due to a lack of investment and Iranian exports have suffered due to USA sanctions.

While it's "very unlikely" that the U.S. will be successful in curbing Iranian exports to zero, the more aggressive threat of sanctions is expected to force about 800,000 to one million barrels a day of the producer's crude off the market by November, Ehsan Khoman, head of Middle East and North African research at Mitsubishi UFJ Financial Group Inc, said in a July 10 note. Looming problems for Iran, the third-largest OPEC producer, added to long-term concerns. Today's WTI trading range remains $69.50 - $75.40.

Brent crude rose more than $1 on Thursday, recouping some ground after its biggest one-day drop in two years during the previous session after Libya said it would resume oil exports and U.S.

"Falling production from Libya, Venezuela and Canada, coupled with looming sanctions on Iran, have provided a solid argument for oil to remain at such elevated levels", said Otunuga. "We talked about minimizing market disruptions and helping partners find alternatives to Iranian supply of oil".

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Sources at South Korean refining companies and a Chinese trading firm indicated that light sweet and medium sour USA crude suppliers may have to step up efforts to remain competitive in the Asian market, especially due to China's continued threats to levy a 25% tariff on American energy products.

"This could be volatile and rocky in the second half of the trading year as investors juggle with the themes driving prices".

Jasper Lawler, head of research at London Capital Group, said: "Given that China and the United States together account for about a third of global oil demand, any slowdown in these economies on the back of a trade war would logically impact demand for oil and therefore its price".

Crude oil prices are now lower.

Mounting supply concerns could push Brent above $85 a barrel, MUFG Bank said in a note. Yesterday, we wrote that a strike in a Shell-operated oil field in Norway helped drive Brent crude oil prices higher.

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