Oil prices fell for a second straight day Wednesday as fresh concern over supply disruptions, geopolitical tensions and trade tensions sent investors scurrying for safety.
Light, sweet crude for April delivery was down $1.83 a barrel to $55.80 in the afternoon trading session, with its retreat extending a selloff that began a day earlier, when Saudi Arabia, Qatar and other producers suggested they’d be looking to cut exports. On Tuesday, Brent crude lost $1.97 to $64.93 a barrel, its lowest closing level since November.
While Russia was reported to be planning to boost production, the market remained focused on supply from Venezuela, which is struggling to get domestic supply into line, and Iran, which is facing sanctions related to its nuclear program.
Traders also cited a growing risk of a trade war between the U.S. and China. And earlier in the day, China’s state energy company Sinopec, the world’s fifth-largest oil importer, warned it would stop buying US crude because it was too expensive.
While the state oil company said it was concerned about tariffs imposed by President Trump, the China National Petroleum Corp. cited Iran as the reason for the move. The European Union added Iran to a blacklist of countries that would face sanctions after it pulled out of the nuclear deal. The sanctions take effect when it expires.
As well, Iran’s refineries face shortages of gasoline after its lower-quality crude runs fell because of refineries operating at reduced rates. Before the Iran sanctions, it ran a 4.3 million barrels-per-day refining capacity and produces about 2.8 million barrels of oil daily.
China, the world’s largest energy user, has been an increasingly important destination for Iranian oil, importing a total of 3.9 million barrels a day in 2016 and accounting for 15 percent of Iran’s oil exports.