Oil falls after Trump threatens to escalate trade war with new tariffs

US crude inventories fell last week by 6.8 million barrels, according to data from industry group, the American Petroleum Institute. Above, an oil well near Tioga in North Dakota. (AFP)
Updated 11 July 2018
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Oil falls after Trump threatens to escalate trade war with new tariffs

TOKYO: Oil prices fell on Wednesday, with Brent dropping by more than $1 at one point, after US President Donald Trump threatened to levy new trade tariffs on China.
The specter of tariffs on a further $200 billion worth of Chinese goods sent commodities lower along with stock markets, with trade tensions between the world’s two biggest economies intensifying.
Brent crude futures were down 75 cents, or 1 percent, at $78.11 a barrel by 0308 GMT, having fallen as low as $77.60. US crude was down 55 cents, or 0.7 percent, at $73.56.
“The trade concerns have bitten today and the reason is that this is above and beyond what the market was expecting,” said Michael McCarthy, chief markets strategist at CMC Markets in Sydney.
The bearish mood was also fueled by news the United States would consider requests for waivers from sanctions due to snap back into place on Iranian crude exports.
Washington will consider requests from some countries to be exempted from sanctions it will put into effect in November to prevent Iran from exporting oil, US Secretary of State Mike Pompeo said on Tuesday.
Washington had earlier told countries they must halt all imports of Iranian oil from Nov. 4 or face US financial measures, with no exemptions.
The US pulled out of a multinational deal in May to lift sanctions against Iran in return for curbs to its nuclear program.
US crude inventories fell last week by 6.8 million barrels, according to data from industry group, the American Petroleum Institute.
Analysts polled by Reuters forecast that crude stocks fell on average by 4.5 million barrels, ahead of government data at 10:30am on Wednesday.


Japan, EU to sign widespread trade deal eliminating tariffs

Updated 17 July 2018
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Japan, EU to sign widespread trade deal eliminating tariffs

  • Both sides are heralding the deal, which covers a third of the global economy and more than 600 million people
  • Besides the latest deal with the EU, Japan is working on other trade agreements, including a far-reaching trans-Pacific deal

TOKYO: The European Union and Japan are signing a widespread trade deal Tuesday that will eliminate nearly all tariffs, seemingly defying the worries about trade tensions set off by President Donald Trump’s policies.
The signing in Tokyo for the deal, largely reached late last year, is ceremonial. It was delayed from earlier this month because Japanese Prime Minister Shinzo Abe canceled going to Brussels over a disaster in southwestern Japan, caused by extremely heavy rainfall. More than 200 people died from flooding and landslides.
European Council President Donald Tusk and European Commission President Jean-Claude Juncker, who arrived Monday, will also attend a gala dinner at the prime minister’s official residence.
Both sides are heralding the deal, which covers a third of the global economy and more than 600 million people.
The deal eliminates about 99 percent of the tariffs on Japanese goods to the EU, but remaining at around 94 percent for European imports into Japan for now and rising to 99 percent over the years. The difference is due to exceptions such as rice, a product that’s culturally and politically sensitive and has been protected for decades in Japan.
The major step toward liberalizing trade was discussed in talks since 2013 but is striking in the timing of the signing, as China and the US are embroiled in trade conflicts.
The US is proposing 10 percent tariffs on a $200 billion list of Chinese goods. That follows an earlier move by Washington to impose 25 percent tariffs on $34 billion of Chinese goods. Beijing has responded by imposing identical penalties on a similar amount of American imports.
Besides the latest deal with the EU, Japan is working on other trade agreements, including a far-reaching trans-Pacific deal. The partnership includes Australia, Mexico, Vietnam and other nations, although the US has withdrawn.
Japan praised the deal with the EU as coming from Abe’s “Abenomics” policies, designed to wrest the economy out of stagnation despite a shrinking population and cautious spending. Japan’s growth continues to be heavily dependent on exports.
By strengthening ties with the EU, Japan hopes to vitalize mutual direct investment, fight other global trends toward protectionism and enhance the stature of Japanese brands, the foreign ministry said in a statement.
The EU said the trade liberalization will lead to the region’s export growth in chemicals, clothing, cosmetics and beer to Japan, leading to job security for Europe. Japanese will get cheaper cheese, such as Parmesan, gouda and cheddar, as well as chocolate and biscuits.
Japanese consumers have historically coveted European products, and a drop in prices is likely to boost spending.