Oil edged lower as traders weighed the first U.S. sanctions over Chinese imports of Iranian crude against a precarious outlook for global growth.
Brent futures dipped below $72 a barrel, erasing earlier gains, while still set for the biggest weekly gain since January. The U.S. penalized a small Chinese refinery and its chief executive officer for allegedly buying Iranian oil, as well as a terminal operator.
The Trump administration’s first intervention in the Asian nation’s refining system is “a clear risk escalation for physical flows for the region,” RBC Capital Markets LLC analysts including Brian Leisen wrote in a note. “While the physical implications are minimal, we think it reasonable that risk premium here is taken more seriously.”
Oil’s advance has been limited by bearish headwinds, including an escalating global trade war and the specter of more OPEC+ supply starting next month.
Several of the cartel’s members have pledged additional cutbacks to compensate for exceeding quotas. The reductions by countries including Kazakhstan, Iraq and Russia should — in theory — offset the plans to revive halted output through to the end of next year, according to a statement on OPEC’s website.
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