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Brent oil falls more than $2 after Trump tariff threat, Libya ports reopen

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LONDON (Reuters) - Global oil benchmark Brent fell more than $2 a barrel on Wednesday after U.S. President Donald Trump threatened to levy new tariffs on China and Libya announced the reopening of key oil export terminals.

The specter of tariffs on a further $200 billion of Chinese goods sent commodities lower along with stock markets, as tension between the world’s biggest economies intensified.

Brent crude LCOc1 fell $2.06, or 2.61 percent, to a low of $76.80 before recovering slightly to $76.86, down $2.00, by 0945 GMT.

U.S. light crude CLc1, supported by a tight North American market, was down 75 cents at $73.36 a barrel.

“Trade concerns have bitten today,” said Michael McCarthy, chief markets strategist at CMC Markets. “If these tariffs are introduced there will be an impact on global growth and demand.”

The price fall was aided by news Tripoli-based National Oil Corp (NOC) had lifted a force majeure on four Libyan oil ports, saying production and exports from the terminals would “return to normal levels in the next few hours”.

Libyan oil production fell to 527,000 barrels per day (bpd) from a high of 1.28 million bpd in February following the port closures, the NOC said on Monday.

“The lifting of force majeure at all the Libyan ports will certainly come as relief from a supply perspective, but it remains to be seen how quickly exports can return to normal,” Harry Tchilinguirian, head of oil strategy at BNP Paribas, told Reuters Global Oil Forum.

Adding to the bearish mood were signs of a possible relaxation of U.S. sanctions on Iranian crude exports.

U.S. Secretary of State Mike Pompeo said on Tuesday that Washington would consider requests from some countries to be exempt from sanctions due to go into effect in November to prevent Iran from exporting oil.

Washington had previously said countries must halt all imports of Iranian oil from Nov. 4 or face U.S. financial measures, with no exemptions.

The United States pulled out of a multinational deal in May to lift sanctions against Iran in return for curbs to Tehran’s nuclear program.

The prospect of sanctions on oil exports from Iran, the world’s fifth-biggest oil producer, has helped push up oil prices in recent weeks with both crude contracts trading near 3-1/2-year highs.

Supply to the U.S. market has also been squeezed by the loss of some Canadian oil production.

U.S. crude inventories fell last week by 6.8 million barrels, according to the American Petroleum Institute, an industry group.

Analysts polled by Reuters forecast on average that crude stocks fell by 4.5 million barrels, ahead of government data at 10:30 a.m. EDT (1430 GMT) on Wednesday.

(GRAPHIC: Iran crude oil exports to major Asian clients in H1 2018 - reut.rs/2NIum8v)

Reuters Graphic

Additional reporting by Aaron Sheldrick in Tokyo; Editing by Dale Hudson

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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