After plunging to new weekly lows on Friday, oil prices are creeping higher again this morning on geopolitical concerns and rumors of US-China trade progress. Crude oil is currently trading at $56.00, slightly higher than Friday’s closing level.
Fuel prices are mixed today. Diesel is trading higher at $1.9011, up 1.2 cents from Friday’s close. Gasoline is trading at $1.8349, down half a cent.
On Friday, Iran captured a British oil vessel travelling through the Strait of Hormuz. Iran claims the seizure was in retaliation against Britain’s seizure of an Iranian oil tanker weeks ago, which Britain claimed was travelling in violation of EU sanctions. While this latest development adds to geopolitical tensions in the region, it’s also come with a silver lining – Britain and Iran seem to be negotiating to resolve their dispute. The US has also hinted that Iran is coming to the table over nuclear negotiations, providing a glimmer of hope that current issues can be resolved. For oil prices, a renewed nuclear deal would mean Iran’s 2.5 MMbpd of oil exports might enter the global market again, which could send prices crashing lower.
On the US-China front, the Chinese are mulling over requests from local buyers to allow agricultural purchases from the US once again, particularly in relation to soybean imports. Rumors in the market point towards a possible tit-for-tat exchange between the US and China wherein China would up its agricultural purchases, while the US would drop some or all of its ban on Chinese tech company Huawei sales. Talks are expected to resume between the two countries as soon as the end of July, and both parties seem interested in making progress.
