Oil prices slide as demand outweighs tensions in the Middle East

Oil prices slid on Friday as fears of ongoing trade disputes will weaken global demand, with the attack on the two oil tankers in the Gulf of Oman on Thursday helping the commodity find a floor.

Brent crude futures tumbled 14 cents to $61.17 a barrel on Friday morning, while the US West Texas Intermediate crude futures fell 28 cents to $52 a barrel.

IEA slashes demand forecast

The International Energy Agency (IEA) has slashed its demand growth forecast for this year by 100,000 barrels a day (bpd) to 1.2 million bpd, as trade disputes show little sign of reaching a conclusion.

OPEC also cut its global oil demand forecast for 2019 even lower than its IEA counterpart to 1.14 million bpd.

US points the finger at Iran for Gulf of Oman tanker attacks

The US were quick to blame Iran for the attacks on the Japanese and Norwegian-owned oil tankers in the Gulf of Oman on Thursday, raising concerns that tensions between Tehran and Washington would worsen.

‘Yesterday’s attacks on the Japanese and Norwegian tankers in the Gulf of Oman underscore the severity of the security risks stemming from the Iran crisis and the difficulty of achieving a diplomatic off-ramp as long as the crippling U.S. sanctions remain in place,’ RBC bank told Reuters.

Following the attack on Thursday oil prices climbed more than 4.5%, but those gains were quickly lost as fears of weakening global demand outweighed rising tensions in the Middle East.

The attack comes as tensions between the US and Iran run high, driven by the imposition of an oil embargo on the Islamic Republic by US President Donald Trump.

Trump has imposed sanctions on Iranian oil exports in an effort to support its allies in the Middle East like the UAE and Saudi Arabia who wish to stop Iran gaining further influence in the region.

Japanese Prime Minister Shinzo Abe is visiting Iran in the hope of reducing tensions between the two countries, with onlookers hoping that Tokyo can open up talks with officials in Tehran and Washington.

The Kokuka Courageous, one of the oil tankers that was attacked and belongs to Tokyo-based Kokuka Sangyo, was reportedly hit by two shells.

'The first shell hit to the rear of the ship on the port side. A fire in the engine room was extinguished with carbon dioxide,’ a Kokuka Sangyo official said at a press conference. ‘The second shell then hit port amidships and the captain decided to evacuate.’