Opec warns of trade war ‘risks’ for oil market

A flag with the Opec logo is seen before a news conference at Opec's headquarters in Vienna December 10, 2016. — Reuters pic
A flag with the Opec logo is seen before a news conference at Opec’s headquarters in Vienna December 10, 2016. — Reuters pic

PARIS, July 11 — The Opec cartel today warned that global trade tensions could have a negative impact on the by pushing down demand for crude.

In its monthly report, the Organisation of the Petroleum Exporting Countries said buoyant world trade in 2017 and 2018 had helped impulse economic growth, and therefore demand for crude.

But this may change further down the line, Opec said, as the United States and fired the latest shots in their escalating trade war.

Washington yesterday threatened to impose new tariffs on another US$200 billion (RM807.4 billion) in goods and Beijing vowed to retaliate. 

The latest moves in the trade war between the world’s top two came just after tit-for-tat duties on US$34 billion in goods came into effect. 

According to Opec “the re-emergence of global trade barriers has thus far only had a minor impact on the global economy”.

However, “if trade tensions rise further, and given other uncertainties, it could weigh on business and consumer sentiment,” the report warned. 

“This may then start to negatively impact investment, capital flows and consumer spending, with a subsequent negative effect on the global oil market.”

Opec’s latest report comes after the cartel and non-member Russia pledged to boost in a meeting in Vienna last month.

The agreement to hike output came after the price of crude soared earlier this year, hitting US$80 per barrel in May.

According to the report, which cites secondary sources, Opec crude production stood at an average of 32.33 million barrels per day in June, an increase of 173,000 barrels per day over the previous month.

“Crude increased mostly in Saudi Arabia, Iraq, Nigeria, Kuwait and UAE, while production showed declines in Libya, Venezuela and Angola,” the report said.

Following the Opec meeting, US President Donald Trump on July 1 said King Salman of oil kingpin Saudi Arabia had agreed to a request to ramp up crude production.

The official Saudi Press Agency confirmed a phone call between the two leaders about oil, but mentioned no specifics.

“Prices too high! He has agreed!” Trump tweeted at the time. — AFP

Source: The Malay Mail Online

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