Oil and Gold Prices Slip, Sanctions Looming on Iran

Oil prices slipped on Monday on the rising output from OPEC, while looming US sanctions over Iran also was in the center of attention. Gold prices slipped on Xi Jinping's speech. 

Brent Oil Futures for delivery in November dropped 0.3 percent to $77.42, while Crude Oil WTI futures for delivery in October also decreased 0.3 percent to $69.61.

The output from the OPEC gained 220,000 barrels per day between July and August, according to a survey.

Data that was released on Friday indicated that the US rig count, which is an early indicator of future output, jumped by 2 to 862 last week, according to oilfield services firms Baker Hughes.

Oil traders will likely stay focused  on the possible disruptions to global crude supplies in the coming week, with the looming US sanctions against Iran being widely expected to lead to a tighter market.

The sanctions will include from November Tehran’s oil exports. They are being reinstated after the US President Donald Trump pulled out of the US-Iran nuclear deal during the earlier part of this year.

Iran is the third largest producer in the Organization of Petroleum Exporting Countries (OPEC), whipping out around 2.5 million barrels per day of crude and condensate to markets this year, equal to around 2.5 percent of global consumption.

Meanwhile, economists are concerned that rising trade barriers between the United States and China will weigh on the global growth and thus erode energy demand.

Markets also believe that the escalating trade friction between them will probably become more intense in the coming months. According to reports, the Trump administration was ready to slap tariffs on an additional $200 billion of Chinese goods as early as this week.

US slapped duties on $34 billion of Chinese goods in July before it implemented a new round of tariffs on a further $16 billion worth of Chinese products on August 23. Trump has warned earlier that the US may eventually target the whole $500 billion in Chinese exports to the US.

Meanwhile, gold prices also plunged in Asia on Monday, a day after Chinese President Xi Jinping delivered a speech about his government’s determination to engage in economic reforms and in the worsening trade war between Beijing and Washington.

Gold futures for delivery in December were lower 0.15 percent to $1,204.90 per troy ounce on the Comex division of the New York Mercantile Exchange.

“China’s determination to fully deepen reforms will not change. We are willing to use practical actions to drive all parties to jointly adhere to trade liberalization and facilitation and build an open world economy,” said Xi to UN Secretary-General Antonio Guterres in Beijing.

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