Oil dips below $70 as trade concerns persist

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Brent oil dropped below $70 a barrel on Wednesday, hurt by concerns about a deepening US-Chinese trade row, although persistent supply worries prevented a steeper price fall.

US sanctions on crude exporters Iran and Venezuela, as well as supply cuts by OPEC, Russia and their allies, have supported prices in recent weeks, tightening the supply outlook.

Benchmark Brent was down 18 cents or 0.3 percent at $69.70 per barrel by 1126 GMT. US crude dipped 15 cents or 0.2 percent to $61.25 per barrel.

“Oil prices had rallied about 40 percent since the beginning of the year but the move higher has for now been put on the back burner,” said Stephen Brennock, analyst at London-based oil brokerage PVM.

Prices fell this week after Washington said it would further raise tariffs on Chinese goods on Friday as trade talks between the world’s top two economies faltered. The row over trade has cast a shadow over the global economy.

“The focus now will be on the two days of talks in Washington scheduled to take place between U.S. and Chinese officials,” said Jasper Lawler, head of research at futures brokerage London Capital Group.

China’s crude imports in April hit a record for the month, at 10.64 million barrels per day (bpd), customs data showed on Wednesday. The country is the world’s biggest oil importer.

“It is questionable whether China will maintain this import pace,” Commerzbank analysts said in a note. “Part of the oil is also likely to have gone into building up stocks before the tougher US sanctions came into force against Iran.”

Before that, prices rallied as Washington tightened US sanctions on Iran with the aim of reducing its oil exports to zero. Most analysts expect Iran’s exports to fall to a little more than 500,000 bpd from about 1 million bpd in April.

Iran, which has said it would continue oil exports despite sanctions, announced it would scale back curbs on its nuclear program under a 2015 deal with world powers. Washington withdrew from the nuclear pact last year.

Restrictions on Iran, as well as on Venezuela, come amid already tight supply as the Organization of the Petroleum Exporting Countries has been withholding output this year.

Azerbaijan’s oil minister said it had received assurances from Saudi Arabia, OPEC’s biggest producer and de facto leader, that Riyadh would not take any unilateral decisions on the global oil deal until OPEC’s June meeting.