Demand concerns helped push oil prices down on Friday (Frederic J. BROWN)

London (AFP) – Oil prices retreated Friday on fresh weak demand growth concerns, having spiked the previous day following attacks on two tankers in the Gulf of Oman.

Global stock markets meanwhile fell on geopolitical fears, uncertainty over the China-US trade row and the gloomy outlook for the global economy, traders said.

In midday deals, London’s Brent North Sea crude oil for August delivery dipped 10 cents to $61.21 per barrel.

New York’s West Texas Intermediate for July delivery dropped 25 cents to $52.03.

Prices had spiked by more than four percent at one stage on Thursday as tanker attacks in the Gulf of Oman — in a major global shipping lane — flashed onto traders’ screens.

“Oil prices may have spiked following the attacks but they have not risen too much considering the risk that an escalation poses,” said Oanda analyst Craig Erlam.

“Perhaps this is a sign of how pressured oil prices are to the downside at the moment, with the US pumping at record levels and the global economy slowing.”

US Secretary of State Mike Pompeo has accused Iran of responsibility for the Gulf tankers attack but Tehran denies this.

– Economic risks –

But the market retreated Friday as the International Energy Agency downgraded its forecasts for global oil demand growth.

The IEA cut its forecast for demand growth this year for the second month straight — and trimmed its second quarter forecast as well.

The Paris-based energy watchdog blamed weakening economic sentiment as the global trade war helps slam the brakes on oil demand.

“Global slowdown fears and trade war risks have intensified which has led to the latest downward revision from IEA,” Erlam told AFP.

“There is a real danger that further downgrades will follow if downside economic risks materialise.” 

Oil had already slumped Wednesday as soaring US crude inventories indicated weak demand growth in the top global consuming nation.

The IEA’s monthly report comes a day after the latest tanker attacks, in the second spate of incidents in a month in the strategic shipping lane.

With some 40 percent of the world’s seaborne oil passing through the Strait of Hormuz, a disruption to shipping could roil markets.

The attacks come amid rising tensions between Tehran and Washington as the US has intensified sanctions on Iran over its nuclear programme.

– Hong Kong dips again –

In Asia, the Hong Kong stock market was again on the back foot, losing 0.7 percent, after the city was rocked this week by violent protests against government plans for a law that would allow extraditions to China and which observers warn could erode its attraction for businesses.

Trading floors have been the scene of unease for weeks since President Donald Trump’s shock decision to hit China with higher tariffs despite expectations the two sides were close to a deal to end their long-running stand-off.

The uneasiness over the past week has seen the price of gold hit a 15-month high of around $1,360 per ounce as traders look for safer assets to shelter from the uncertainty on world markets.

Eyes are now on the G20 summit in Japan later this month where Trump and his Chinese counterpart are expected to meet to discuss the issue, though Washington has been playing down the chances of a deal being struck.

However, support has come from bets that the Federal Reserve will cut interest rates soon as the economy stutters and the trade war rumbles along.

– Key figures around 1115 GMT –

Oil – Brent North Sea: DOWN 10 cents at $61.21 per barrel

Oil – West Texas Intermediate: DOWN 25 cents at $52.03

London – FTSE 100: DOWN 0.6 percent at 7,326.92 points  

Frankfurt – DAX 30: DOWN 0.9 percent at 12,064.28 

Paris – CAC 40: DOWN 0.5 percent at 5,347.23

EURO STOXX 50: DOWN 0.7 percent at 3,367.24 

Tokyo – Nikkei 225: UP 0.4 percent at 21,116.89 (close)

Hong Kong – Hang Seng: DOWN 0.7 percent at 27,118.35 (close)

Shanghai – Composite: DOWN 1.0 percent at 2,881.12 (close)

New York – Dow: UP 0.4 percent at 26,106.77 (close)

Euro/dollar: DOWN at $1.1255 from $1.1276 at 2100 GMT

Pound/dollar: DOWN at $1.2632 from $1.2674 

Dollar/yen: DOWN at 108.25 yen from 108.38 yen

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Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.