Crude oil prices eased in Asia on Tuesday amid concerns over global economic growth, while renewed U.S. economic sanctions on Iran drew less of a market response.
ICE Brent crude oil eased 0.45 percent to US$72.84 a barrel. NYMEX WTI fell 0.27 percent to US$62.93 a barrel. Brent settled up 0.47 percent to US$73.17 a barrel, while WTI eased 0.06 percent to US$63.10 a barrel.
U.S. sanctions on Iran started at midnight on 4 November, though eight countries were granted waivers. The sanctions are expected to bite into crude oil exports by Iran, but Persian Gulf nations led by Saudi Arabia are pumping more oil to fill the gap.
The move, however, had been well-flagged to markets for months in advance.
Jameel Ahmad, global head of currency strategy and market research at FXTM, said in a note on Tuesday, that the sanctions were priced into markets “a long time ago.”
“I wouldn’t associate sanctions coming back into play as a near-term driver for the price of oil. I would instead, focus more heavily on the global demand outlook because of the ongoing external uncertainties weighing down on economic prospects. This is something I see of more of a risk for oil over the coming months,” Ahmad said.
If concerns over slowing global growth come to fruition, it signals less demand is needed for commodities like Oil and I see this as a major risk to the valuation of Oil.
Traders were watching weakness in emerging markets currencies with some concern about the potential impact on oil demand.
China, the world’s top crude oil importer, has seen the yuan weaken steadily against the dollar in the past two months, making dollar-denominated oil more expensive. The same case has been seen for India, the world’s third largest importer, with the rupee down sharply in the past two month amid concerns of capital flight from emerging markets.