Still, some fear that production capability may soon fall below demand: File Image/Pixabay
The latest round in the tit-for-tat China/U.S. trade battle came on Monday with the former country moving to impose higher tariffs on a range of U.S. goods including frozen vegetables and liquefied natural gas - which in turn caused pressure on Wall Street and, in tandem, oil prices.
Brent fell 39 cents to settle at $70.23 per barrel, while West Texas Intermediate fell 62 cents to settle at $61.04 per barrel.
However, analysts note that Monday's losses would have been far more severe had not four commercial vessels - including two from Saudi Arabia - been attacked on Sunday near Fujairah, one of the world's largest bunkering hubs (the incident caused crude to rise by over $1 per barrel earlier on Monday).
Mike Pompeo, U.S. secretary of state
Not higher, not radically higher, not crazy higher, not chaos, but lower
Plus, despite media suggesting that market chaos could erupt due to everything from the U.S./China tensions to Iran and Venezuela, a few experts think the worry over the crude market may be somewhat unwarranted.
This was the view taken by Mike Pompeo, U.S. secretary of state, who told CNBC by way of example that "simple math" shows there's been no disruption to the overall global supply of crude since the U.S. withdrew from the Iran nuclear deal.
He said," I'll bet on your television station folks were talking about how oil prices would rise, they'd spike, it would be chaos in the crude oil markets; in fact, crude oil prices today are lower than they were the day that we withdrew from the Joint Comprehensive Plan of Action - not higher, not radically higher, not crazy higher, not chaos, but lower."
But there's no convincing analysts with a proclivity for forecasting gloomy outlooks that the commodity is more resilient than given credit for: Barclays said in a note that "While Saudi Arabia, United Arab Emirates, and other Organization of the Petroleum Exporting Countries will likely fill the gap created by lower Iranian exports, albeit more reluctantly than last year, it will come at the cost of a significant reduction in the spare capacity and also increase the risks of a potential conflict in the Middle East."
Reuters also reiterated concerns that oil production capacity could fall to under 1 percent of global oil demand by the end of the year if OPEC compensates falling production from Iran and Venezuela, leaving oil prices exposed to sharp swings in the event of unplanned outages.