Oil Falls on Slowing Chinese Demand, US-China Trade Spat
Oil prices fell on Wednesday after Chinese import data showed a slowdown in demand and as a trade dispute between Washington and Beijing escalated further.
U.S. crude futures fell more than $1 per barrel to $68.13 after China said it was retaliating against U.S. tariffs by slapping additional import duties of 25 percent on $16 billion worth of U.S. goods, including oil and diesel .
Front-month Brent crude oil futures were down 67 cents at $73.98 a barrel by 1300 GMT.
The trade dispute has rattled global markets on fears it could lead to a slowdown of the world's largest economies and result in a lower demand for commodities.
China's crude imports recovered slightly in July after falling for the previous two months, but were still among the lowest this year due to a drop-off in demand from the country's smaller independent, or "teapot", refineries.
Shipments into the world's biggest importer of crude came in at 36.02 million tonnes last month, or 8.48 million barrels per day, rising from 8.18 million bpd a year earlier and just up on June's 8.36 million bpd, customs data showed.
"Even before their implementation, these proposed (Chinese) tariffs are starting to have an impact, with Chinese imports of U.S. crude falling by 70 percent from April to July," Goldman Sachs said in a note on Wednesday.
The bank said, however, that such tariffs were unlikely to derail the outlook for U.S. energy exports.
Markets remained supported by the introduction on Tuesday of new U.S. sanctions against Iran, which initially target Iran's purchases of U.S. dollars - in which oil is traded - as well as metals trading, coal, industrial software and its auto sector.
From November, Washington will also target Iran's petroleum sector.
Iran is the third-largest producer in the Organization of the Petroleum Exporting Countries.
"We view that it is very unlikely that the U.S. administration will be successful in reducing Iranian exports to zero," analysts at MUFG said in a note on Wednesday.
They said Iranian exports were likely to drop by up to 1 million bpd by November but even that could push Brent to $85 per barrel if oil markets were hit by other disruptions in producer countries such as Libya or Venezuela.
The market was also supported by a report on Tuesday from the American Petroleum Institute, which said crude inventories fell by 6 million barrels in the week to Aug. 3 to 407.2 million.
Official U.S. fuel storage data is due later on Wednesday from the Energy Information Administration.
Reporting by Henning Gloystein, Dmitry Zhdannikov and Amanda Cooper