In Canada, an outage at the 360,000-barrel per day (bpd) Syncrude oil sands facility reduced flows into Cushing, Oklahoma, the delivery point for USA futures.
A decision on what to do about imports from Iran by China and India, who together bought about 1.4 million barrels a day of Iranian crude over the past three months, will probably have a larger impact on the broader oil market.
On Monday, Suncor Energy said its 360,000-barrel-per-day Syncrude facility would resume some production in July, earlier than expected, following an outage last month that disrupted total output and sent USA prices higher. "You're seeing some at $70, but we could go down to $64, where we took off from".
Both crude benchmarks retreated from near four-year highs after U.S. Secretary of State Mike Pompeo said the United States would consider requests from some countries to be exempted from sanctions on Iranian oil. Today's WTI trading range remains $69.50 - $75.40.
"Falling production from Libya, Venezuela and Canada, coupled with looming sanctions on Iran, have provided a solid argument for oil to remain at such elevated levels", said Otunuga. This raised the possibility that China would retaliate by slapping a tariff on imports of US crude oil. Additionally, at some time in the near future, the Canadian pipeline problem will be fixed and the supply disruption over. "In regard to the year-end outlook, this depends on how global trade developments play out and if rising production from Russian Federation and Saudi Arabia is able to replace the production lost from geopolitics", said Otunuga.More news: Feds should step in to keep national bus service running: Notley
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Libyan oil production was cut in half because of national security issues, though the NOC said its output would soon return to normal.
Jasper Lawler, head of research at London Capital Group, said: "Given that China and the USA together account for about a third of global oil demand, any slowdown in these economies on the back of a trade war would logically impact demand for oil and therefore its price".
Momentum economist Sanisha Packirisamy said yesterday that for her inflation model, her forecasts were an average of $72.2 per barrel for this year, $72.5 per barrel for next and $75 per barrel for 2020.
Mounting supply concerns could push Brent above $85 a barrel, MUFG Bank said in a note.
China's crude oil imports fell for a second month in a row in June to their lowest since December, as shrinking margins and volatile oil prices led some independent refiners to scale back purchases.