Aug. 20 (UPI) -- The price of crude oil was stable ahead of the start of U.S. trading on Monday as supply-side fears balanced concerns about growth in the global economy.
Iran announced Monday that French supermajor Total had formally left a contract to develop its South Pars natural gas field, about three months before the U.S. sanctions noose tightens around Iran's oil sector.
The French supermajor was trying to secure a waiver ahead of the November deadline. The early departure shows relief from U.S. President Donald Trump is unlikely and Vandana Hari, a market analyst and founder of Vanda Insights, said in an emailed report the loss of Iran "could blow a bigger hole" in the global supply of crude oil than the steady declines from Venezuela.
Secondary sources reporting to economists at the Organization of Petroleum Exporting Countries put the July average for Iranian crude oil production at 3.7 million barrels per day, about 2 percent less than the first quarter average. Venezuela produced 1.3 million bpd last month, about 15 percent less than the first quarter average. Some analysts have said U.S. sanctions could sideline about 1 million bpd from Iran, though geopolitical issues could add an additional premium to the price of oil.
Higher U.S. oil production, coupled with pledges of market security from Saudi Arabia and Russia, could offset some of the supply-side fears. Meanwhile, there are indicators like a decline in U.S. consumer confidence that are balancing the market sentiment.
"Brent could remain tethered to $70-71 levels for the next few weeks, under pressure from demand worries," Hari said. "But we don't see a sustained move downward."
The price for Brent crude oil, the global benchmark for the price of oil, was up 0.36 percent as of 9:20 a.m. EDT to $72.09 per barrel. West Texas Intermediate, the U.S. benchmark, was down 0.11 percent to $65.14 per barrel.
On the economic front, there could be signs of a thaw in the recent trade tensions between the United States and China. On Monday, the U.S. Trade Representative started five days of hearings to vet public comments on proposed tariffs on about $200 billion worth of Chinese products.
From washing machines to steel pipe, consumer advocacy groups and trade unions alike have expressed concern about the fallout of U.S. trade actions on China. A month ago, the U.S.-China Business Council was saying "enough is enough."
In its latest indicator, the Organization for Economic Cooperation and Development said its composite of leading indicators were "pointing tentatively to easing growth momentum in the OECD area as a whole."