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Confusion in the markets and the uncertainty of oil demand after the resumption of the trade war led to the end of the US crude week down 1.3%, while the Brent rose 1, 2% during the week, while the Alliance of OPEC producers was trying to contain the negative repercussions of the war. Trade will stabilize the oil market as it prepares for an economic slowdown by further tightening the oil supply to maintain price cohesion and balance supply and demand.
In this context, the agency "Platts" International Oil Information believes that the decline in crude prices is mainly due to China's intention to impose a new tariff on imported US oil , resulting in an escalation of the trade war with the United States, pointing out that the new tariffs on oil imports "In the interest of China, this would entail an additional cost of 5% of the price a barrel, about US $ 3, to import US barrels into China, "he said. "This is enough to make US sales in China uncompetitive and will in turn lead to reduced imports," he said. Platts. "
The trade war between the United States and China has opened a new chapter in escalation after Beijing imposed retaliatory duties on US goods, including crude oil, offset by the announcement of the US President Donald Trump according to which Chinese imports would be targeted on additional tariffs of 5% in response to what he called a "Chinese initiative". Policy "to impose duties on US exports worth $ 75 billion.
A recent report from the International Information Agency said the fall in oil prices was expected by the end of the week, as trade tensions between Washington and Beijing were getting more heated. additionally threatening, likely to weaken the growth of global energy demand.
He pointed to the drop in oil futures following China's announcement of its intention to impose 5% tariffs on imports of US crude oil as of 1 September. This step is part of a new series of US $ 75 billion worth of US goods imports that will be implemented in two installments from the beginning. next month and next December 15th.
The report notes that the Chinese Ministry of Finance confirmed that tariffs were in retaliation of 10% on the US government tariff on the value of about 300 billion worth of Chinese goods announced in the middle of the month.
The report said the significant drop in oil futures followed a series of tweets by US President Donald Trump in which he wrote: "We do not need China." Frankly, the situation would be better without them ", noting that" the huge sums of money stolen by China in the United States will cease from year to year ". And must stop. "
The report pointed out that international analysts have confirmed that the concentration of concerns on trade issues and their impact on global demand would raise fears that the trade crisis will end.
The report says that the impact of tariffs on US producers is not clear, pointing out that Beijing will have to buy other barrels and that this will open up non-US sales opportunities, which will drive at a low demand for US crude futures.
According to the report, US exports to China are expected to average 56,000 barrels a day this month, down from the recent high of 279,000 barrels per day in May.
According to the report, China's plan to impose a 5% tariff on US crude imports from next month caused a drop in crude oil prices on Friday, jeopardizing US crude oil shipments. shipped by sea to China and limiting the interest in the purchase of US crude to Chinese refineries. .
This is the first set of tariffs that China has imposed on US crude to date. Other major energy products, such as liquefied natural gas (LNG), are already subject to a 25% tariff in Beijing since the start of the trade dispute last year, according to the report.
The measures taken by Washington have led to the continued escalation of economic and trade frictions between China and the United States, the report said, noting that they had seriously damaged the interests of the two largest powers. of the world and seriously threatened the multilateral trading system and the principle of free trade.
"The decline in oil prices has been influenced by the announcement of the Beijing tariff, while investors in the energy and financial markets have adjusted their long positions due to fears of the future. a more general downturn in the world's second-largest economy, as trade friction and its negative impact on oil demand intensified, "the report says.
Oil prices fell at the end of last week after China announced US $ 75 billion worth of retention duties on US goods, including crude oil, as a result of a new escalation of the trade dispute between the two largest economies in the world.
Brent crude futures closed at 58 cents, or 1 percent, down from $ 59.34 a barrel, according to Reuters.
West Texas Intermediate (WTI) futures were down $ 1.18, or 2.1%, to $ 54.17 per barrel. US crude ended the week down 1.3%, while Brent rose 1.2%.
China will impose additional tariffs of 5 to 10 per cent on 5,078 products originating in the United States, including crude oil, agricultural products such as soybean and small aircraft.
The Chinese are worried about US President Donald Trump, who has ordered US companies to consider closing their operations in China and manufacturing their products in the United States.
Investors also focused on the speech delivered at Jackson Hole by Federal Reserve Chairman Jerome Powell, in which he gave little clue as to whether the US central bank would cut rates. interest at its next meeting.
"Policy makers will have a realistic discussion about a half percentage point cut in US interest rates at their next meeting in September," said James Bullard, chairman of the US Federal Reserve. St. Louis.
Fears of a possible recession worsened as the US manufacturing sector reported its first monthly contraction in almost 10 years.
But oil prices continue to be supported by cuts in oil production from OPEC members and Russia, as well as by lower exports from Iran and Venezuela following sanctions imposed by the United States.
Harry Chillingorian of BNP Paribas believes that the market has received negative data, Russia's crude oil production exceeding its OPEC + quota and the Russian state oil company Rosneft helped ship the oil Venezuelan in China and India.
The number of oil rigs in operation in the United States recorded the largest weekly decline in almost four months and fell to the lowest level since January 2018, as producers reduced their spending on drilling operations.
Dr. Hughes Energy Services, in its closely monitored weekly report, said drilling companies had closed 16 oil rigs during the week ending Aug. 23, the largest reduction since the week ending April 26 and the seventh weekly decline. In the last eight weeks.
The total number of active oil platforms in the United States rose from 860 to 754 the same week a year earlier.
The number of active oil rigs, a preliminary indicator of future production, has declined over the past eight months, with independent exploration and production companies cutting back on new drilling, putting more and more oil into the pipeline. focus on profit growth only on the increase in production.
In contrast, the number of natural gas platforms in America fell by three to 62, the lowest level since April 2017.
Last week, OPEC revealed that its share of the global oil market had fallen to 30% last month, in a continuing effort to cut production, up from 34% a decade ago, against 35% in 2012..
Last month, OPEC production fell by 246 trillion bpd to settle at 29.609 trillion bpd, mainly due to voluntary cuts in the supply of Saudi Arabia. Saudi Arabia and severe sanctions imposed by the United States on Iran and Venezuela.
Although OPEC continues its production cuts, prices fell from the highest level recorded in April 2019 in April ($ 75 a barrel to less than $ 60 a barrel at the moment), and the work of the 39 Organization of the oil exporting countries out Production is decreasing until next March.
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