Oil prices rose on Friday even as the start of US president Donald Trump’s tariff hike on $200 billion of Chinese goods kept tensions high in the trade dispute between the world’s two biggest economies.
Brent crude oil was up 67 cents at $71.06 a barrel by 1145 GMT, having touched a peak of $71.23.
US West Texas Intermediate (WTI) crude futures were up 35 cents at $62.05, having earlier hit $62.49.
Both contracts were on track for small weekly gains.
The United States escalated its tariff war with China on Friday by increasing levies to 25 per cent for $200 billion worth of Chinese goods, but negotiations were set to continue on Friday.
US president Donald Trump issued orders for the tariff increase, saying China ‘broke the deal’ by reneging on previous commitments. He also said he would start the ‘paperwork’ on Friday for 25 per cent duties on a further $325 billion of Chinese imports.
Prices were supported by tighter supply amid continuing production cuts by the Organisation of the Petroleum Exporting Countries (OPEC) and US sanctions on Iran and Venezuela.
Growing trade between the world’s two largest oil consumers could affect oil demand. The two countries together accounted for 34 per cent of global oil consumption in the first quarter of 2019, data from the International Energy Agency shows.
While trade war concerns have weighed on prices this week, ‘the spreads clearly point toward a tight market’, ING bank said.
The July Brent crude contract was trading at nearly $1 a barrel above the August contract in a market structure known as backwardation.
The United States reimposed sanctions on Iran in November after pulling out of a 2015 nuclear accord between Tehran and six world powers last year, though it allowed Tehran’s biggest buyers to continuing purchasing oil via waivers for another six months.
Those exemptions ended at the beginning of May, with Washington seeking to cut Iran’s oil exports to zero.
Meanwhile, efforts by OPEC to crimp supply to reduce global inventories have also supported prices.
Markets have been buoyed further by expectations that oil demand will rise in 2019. The US Energy Information Administration expects global appetite for oil to rise by 1.4 million barrels per day this year.
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