After three consecutive days of gains, oil prices inched down on Friday, July 27, 2018, despite the fact that Saudi Arabia continues to keep transportation of crude through The Red Sea shipping lane on hold, U.S inventories are still dwindling and the trade tensions between US and Europe are easing. These factors however continue to spread uncertainty in the oil market.
Brent futures were down 6 cents at $74.48 a barrel by 0043 GMT, after gaining 0.8 percent on Thursday.
U.S. West Texas Intermediate futures were also 6 cents lower, at $69.55, after posting a nearly 0.5-percent gain the previous session.
On Wednesday, July 25th 2018, U.S President Donald Trump and president of the European Commission Jean-Claude Junker struck deal that put down fears of an immediate trade war between them, meaning that the demand from both the major countries will not be affected in the near future.
On the other hand, after an attack by Yemen’s Iran- aligned Houthi movement, on the Red Sea shipping lane of Bab al-Mandeb, Saudi Arabia has decided to temporarily halt its oil shipment through the key shipping lane, reducing supply, thereby increasing chances of a price hike.
However, since Saudi Arabia has the East-West pipeline which mainly transports crude from fields in East to Yanbu for export, it could counterbalance the blockage caused by Bab al-Mandeb’s closure.
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