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The US-China dispute is not just limited to the trade. In the fully developed US-China trade war, the result may go beyond the trade. Things are escalating during this most critical period where China is trying and putting its efforts to lessen financial risks. Even the fall in oil prices on Friday (31 Aug. 2018) amid concerns that the trade war between China and the United States could escalate. Even it was further prevented by the US sanctions looming against Iran’s oil exports.
At present, the International crude oil futures were at $77.55 per barrel at 0106 GMT, down 22 cents and US West Texas Intermediate (WTI) crude futures were at $70.19 a barrel, down 6 cents. Despite the sharp fall in Venezuela supply and concerns over US sanctions against Iran that will go to target its oil exports from November, the crude markets in August are on track to post more than 4 per cent rise for Brent and a 2 per cent rise for WTI.
According to the trade data, the amount of unsold crude stored in the Atlantic Basin has diminished gradually in size from around 30 cargoes to just a handful in recent weeks. It clearly indicates that the demand is increasing gradually which led to a rise in crude oil prices. Despite this trade data, many experts believe that the US-China trade dispute and dispute between the United States and other economies may drag to economic growth or even fuel demand.
So, the commodity market is mostly going to be affected by the US-China trade war which will ultimately impact the economic growth.
In multiple reports, it was found that the US President Donald Trump is planning to level up trade conflict with China and has prepared to impose tariffs on $200 billion more in Chinese imports as soon as public comment period on the plan ends.
Meanwhile, China’s Shanghai crude oil futures which were launched in March 2018 will go to see the delivery of their first contract on 31st Aug. Everybody was surprised to see the speed at which Shanghai’s crude’s take-up.
Among the three major crude benchmarks, WTI, Shanghai, and Brent – China’s first-month crude futures make up a share of around 15 per cent, in terms of monthly volumes. And since its launch, it has gained around 10 per cent in value to 481 yuan ($70.31) per barrel.
But, one thing is clear! The speed that Shanghai crude’s take up, it reflects China’s importance as the world’s biggest oil importer which also the policy/strategy of China to increasingly use the Yuan currency in global trade as much as possible, especially during times of economic disputes with the United States.
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