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Oil slips as demand concerns outweigh Mideast geopolitics

Published: Updated:

Oil prices fell on Friday on fears trade disputes will dent global oil demand, although the attacks this week on two oil tankers in the Gulf of Oman gave prices a floor. Brent crude futures were down 14 cents at $61.17 a barrel at 0846 GMT, having settled up 2.2 percent on Thursday.

US West Texas Intermediate crude futures were down 28 cents at $52 a barrel. WTI also closed up 2.2 percent in the previous session. Both contracts were on track for weekly declines of more than 3 percent.

The International Energy Agency cut its demand growth forecast for 2019 by 100,000 barrels per day (bpd) to 1.2 million bpd, due to worsening prospects for world trade. But the Paris-based agency said demand growth would climb to 1.4 million bpd for 2020.

On Thursday, the Organization of the Petroleum Exporting Countries cut its 2019 forecast for growth in global oil demand even lower than the IEA, to 1.14 million bpd. The attacks near Iran and the Strait of Hormuz pushed oil prices up as much as 4.5 percent on Thursday.

It was the second time in a month tankers have been attacked in the world’s most important zone for oil supplies, amid rising tensions between the United States and Iran. Washington quickly blamed Iran for Thursday’s attacks, but Tehran denied the allegation.

“Yesterday’s attacks on the Japanese and Norwegian tankers in the Gulf of Oman underscore the severity of the security risks stemming from the Iran crisis and the difficulty of achieving a diplomatic off-ramp as long as the crippling US sanctions remain in place,” RBC bank said.

Tensions in the Middle East have escalated since US President Donald Trump withdrew from a 2015 multinational nuclear pact with Iran and re-imposed sanctions, especially targeting Tehran’s oil exports.