Global trade and the imminent sanctions of the United States against Iran

Oil prices plunged Monday into a climate of caution as the fall in financial markets last week and the strength of the dollar earlier this week have highlighted fears of a slowdown in growth, especially in emerging economies of Asia.

Brent crude futures in the first month were down 39 cents or 0.5% to $ 77.23 a barrel at 6:16 GMT.

WTI (West Texas Intermediate) futures contracts in the United States were $ 67.31 per barrel, down 28 cents (0.4%) from their latest settlement.

Investors remained wary after last week's heavy losses, while a strong dollar on safe haven purchases puts the emerging markets' buying power to the test.

"The slowing economic environment and the symptoms of a slowdown in international trade have exacerbated bearish conditions as growth prospects darken," said Benjamin Lu of Phillip Futures broker in Singapore.

Singapore-based Eastport-based oil broker said stock prices were falling in the face of policy uncertainty, rising interest rates and disappointing corporate earnings.

The turmoil in the financial markets could "weigh on investment and consumer spending, reduce trade flows and ultimately weigh on demand," he said.

Hedge funds have reduced their upward bets on US crude over the last week to the lowest level in more than a year, the US Commodity Futures Trading Commission announced on Friday.

The speculation group reduced its combined futures and options position in New York and London by 42,644 contracts to 216,733 in the week to 23 October, its lowest level since September 2017.

Signs of slowing global trade have also been observed, with dry bulk and container shipments – which carry most raw materials and manufactured goods – under pressure.

On the supply side, oil markets remain tense, while US sanctions against Iranian oil exports should materialize. They are expected to start next week and are expected to tighten, particularly in Asia, which absorbs most of its shipments.

The tight market in Asia is visible in the small amount of unsold crude oil stored in oil tankers in the waters surrounding Singapore and southern Malaysia, the region's main trading and oil storage center.

According to the Refinitiv Eikon ship tracking data, four stationary super-tankers are currently filled with crude oil.

That's down from about 15 a year ago and 40 in mid-2016, at the height of the overabundance of supply.

In North America, however, there is no shortage of oil as crude oil production in the United States has increased by almost a third since mid-2016 to about 11 million barrels per day.

Production is expected to increase further. US drillers added two oil rigs during the week to October 26, bringing the total to 875, the highest level since March 2015, energy services firm Baker Hughes said Friday.

More than half of the US oil rigs are in the Permian Basin, western Texas, and eastern New Mexico, the largest oil shale formation in the country.