China trade war could get India new oil suppliers from US

China trade war could get India new oil suppliers from US

China trade war could get India new oil suppliers from US

Oil was mixed on Friday as a Canadian supply outage supported US crude prices, while an increase in production from OPEC's biggest exporter Saudi Arabia pushed Brent lower.

"Because the oil market is already in tight supply due to the numerous outages, this would drive global prices (Brent) further up", Commerzbank said, in a note, Reuters reported.

Reuters in a report quoted familiar sources as saying that South Korea would not lift any Iranian crude and condensate in July for the first time over the past six years. Standing in the line of fire are USA crude supplies to China, which have surged from virtually zero before 2017 to 400,000 barrels per day (bpd) in July.

China says it will retaliate, and U.S. President Trump said on Thursday he may ultimately impose tariffs on more than a half-trillion dollars worth of Chinese goods.

Global benchmark Brent rose 37 cents, or 0.5 percent, to $77.48 a barrel by 0305 GMT.

The outage at the 360,000 barrels per day (bpd) Syncrude facility in Canada has contributed to a sharp reduction in the discount for US crude versus Brent crude over the past month.

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But as is the case with any geopolitical conflict, the smart money always identifies opportunities, and Lee Dal-seok, senior researcher at the Korea Energy Economic Institute pointed out that "If China retaliates with tariffs on US crude, that could improve South Korea's terms of buying USA crude.because the USA would need a market to sell to".

USA markets also garnered support from a government employment report showing better-than-expected growth in jobs.

He said his refinery had cancelled USA crude orders and would switch to Middle East or West African supplies instead.

"Indian refiners can't absorb all the US oil that was going to China".

Chinese refiners were the top buyers of American crude oil in May, and have been regular importers since the USA revived domestic output and exports in recent years.

"Looming U.S. sanctions on Iran, however, are causing serious concerns amongst market players". Saudi Arabia had earlier reported to the Organization of the Petroleum Exporting Countries that they had pumped 10.488 million bpd in June, up by 458,000 bpd from their self-reported figure for May, OPEC sources told Reuters.

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USA investment bank Jefferies said on Friday it expected “a drop in Iranian exports well in excess of 1 million bpd” due to the US sanctions.

Two other sources said South Korea cancelled July loadings of crude and condensate cargoes from Iran as it was uncertain whether the country would receive an exemption from United States sanctions on Iran trade.

The country is one of the biggest oil and gas importers in the world and one of Iran's top clients in Asia.

"At the same time, Venezuela... will lose another 400,000 bpd by year-end with production going to below 1 million bpd", FGE said, adding that another 300,000 bpd of Libyan capacity was disrupted.

In addition to reducing the price of its August barrels, Saudi Arabia also told the Organization of the Petroleum Exporting Countries (OPEC) that it increased production by nearly 500,000 barrels per day last month.

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