Oil prices are now responding to daily doses of rhetoric related to Iran, with WTI and Brent inching higher Thursday following the Pentagon’s vow to deploy equipment and personnel to Saudi Arabia to boost defenses. WTI pared some earlier losses from the day before on surprise news of a US crude buildup, and Brent finished higher Thursday, but the Pentagon’s announcement doesn’t really have market legs, particularly once it becomes clearer, beyond the headlines, that the deal calls for only 200 support personnel, one patriot battery and four sentinel RADARs. Today, oil prices have headed lower already, gearing up for a weekly loss, due to the fast pace of Saudi production recovery and slowing Chinese economic growth eating away at demand outlook.
US Sanctioning Chinese Shippers Benefits Saudi Arabia
The US has slapped sanctions on Chinese firms for “knowingly engaging” in transporting Iranian oil. The sanctioned firms include two tanker subsidiaries of Chinese state-owned shipping giant Cosco Shipping Corporation. Inevitably, this has caused a lot of scrambling among traders to get in front of sanctions.
Oil traders in Asia found themselves in a rush to cancel bookings with these companies and will also have to let provisional charters expire. What’s more, oil cargoes that have already been loaded onto vessels of these sanctioned entities are questionable. It is unclear whether already loaded oil will need to be offloaded…
