Oil prices slide as demand outweighs tensions in the Middle East

Oil prices tumbled on Friday as investors fears that ongoing trade disputes will hurt global demand outweigh geopolitical issues in the Middle East.

Oil prices slid on Friday as fears of ongoing trade disputes will weaken global demand, with the attack on the two oil tankers in the Gulf of Oman on Thursday helping the commodity find a floor.

Brent crude futures tumbled 14 cents to $61.17 a barrel on Friday morning, while the US West Texas Intermediate crude futures fell 28 cents to $52 a barrel.

IEA slashes demand forecast

The International Energy Agency (IEA) has slashed its demand growth forecast for this year by 100,000 barrels a day (bpd) to 1.2 million bpd, as trade disputes show little sign of reaching a conclusion.

OPEC also cut its global oil demand forecast for 2019 even lower than its IEA counterpart to 1.14 million bpd.

US points the finger at Iran for Gulf of Oman tanker attacks

The US were quick to blame Iran for the attacks on the Japanese and Norwegian-owned oil tankers in the Gulf of Oman on Thursday, raising concerns that tensions between Tehran and Washington would worsen.

‘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 U.S. sanctions remain in place,’ RBC bank told Reuters.

Following the attack on Thursday oil prices climbed more than 4.5%, but those gains were quickly lost as fears of weakening global demand outweighed rising tensions in the Middle East.

The attack comes as tensions between the US and Iran run high, driven by the imposition of an oil embargo on the Islamic Republic by US President Donald Trump.

Trump has imposed sanctions on Iranian oil exports in an effort to support its allies in the Middle East like the UAE and Saudi Arabia who wish to stop Iran gaining further influence in the region.

Japanese Prime Minister Shinzo Abe is visiting Iran in the hope of reducing tensions between the two countries, with onlookers hoping that Tokyo can open up talks with officials in Tehran and Washington.

The Kokuka Courageous, one of the oil tankers that was attacked and belongs to Tokyo-based Kokuka Sangyo, was reportedly hit by two shells.

'The first shell hit to the rear of the ship on the port side. A fire in the engine room was extinguished with carbon dioxide,’ a Kokuka Sangyo official said at a press conference. ‘The second shell then hit port amidships and the captain decided to evacuate.’


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

See an opportunity to trade?

Go long or short on more than 16,000 markets with IG.

Spread bet and trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Bid
Offer
-
-
China 300
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.