February 2020, Vol. 247, No. 2

Global News

Oil Prices Rise, Fall on Eve of Trade Deal

Crude oil prices surged in early January and retreated by mid-month after a U.S. drone strike on Iran’s top general and a retaliatory missile strike on an Iraqi military base. The initial strike caused the largest one-day price spike since September, when an Iranian drone hit a Saudi Aramco facility.

The timing of escalating tensions in the Middle East were viewed as economically troublesome worldwide, and particularly for the U.S. and China, who were preparing to sign off on a “Phase 1” trade deal. That agreement could energize the industrial sectors of both economies. The industrial sector accounts for the largest share of energy consumption, meaning that any sustained increase in oil prices could dampen the economic effect of a deal.

China’s imports of major commodities ended last year with a bang.  Reuters reported December crude oil imports were down only slightly to 10.8 MMbpd from November’s record 11.1. Imports averaged 10.2 MMbpd in 2019, up 9.5% from 2018 and the 17th straight record annual high.

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