Oil holds steady after US-China set to meet for talks

Brent surged by 4 per cent on Wednesday following positive economic data from China, the world's biggest oil exporter

A container ship unloading cargo from Asia, at the Port of Long Beach, California. The US-China trade war has roiled the commodities markets. AFP 

Oil held steady following a 4 per cent jump on Wednesday after the US and China agreed to meet to defuse trade tensions.

Brent was trading at $60.65 per barrel at 11.53am UAE time after closing at $60.70 on Wednesday.

The benchmark recovered its losses after positive data from China helped boost sentiment.

Chinese services sector marked the biggest increase in recruitment in over a year, according to a private survey. Chinese state refiners PetroChina and Sinopec also increased their August imports by 2.03 per cent over the previous month. Beijing’s oil imports according to the survey grew 8.8 per cent or 800,000 bpd year-on-year. Demand growth is positive news for oil markets that have been concerned about a decline in demand in China, the world’s largest oil importer.

Additional US sanctions on Iran that target its shipping network will tighten markets as the Islamic Republic’s exports are set to come under further squeeze.

Iranian tanker Grace 1, since renamed Adrian Darya 1 has sailed into the unknown carrying 2.1 million barrels of crude. The tanker had been impounded off the coast of Gibraltar by the UK's Royal Marines but later released. The US has declared the vessel 'blocked property' saying it has links to Iran's Islamic Revolutionary Guard Corps and also declared its Indian captain Akhilesh Kumar a "specially designated global terrorist".

The US since walking away from the nuclear deal last year has looked to drive Iran's exports to zero. Washington is now using a carrot and stick approach to end Tehran's attempts to sell its oil using covert means. The US' Special Representative to Iran Brian Hook announced on Wednesday a $15 million reward programme for information on the country's crude oil shipping network. Late Wednesday the Financial Times reported Mr Hook had approached captains of vessels connected with Iran, including Mr Kumar offering them rewards for handing their ships over to US authorities.

Iran’s foreign ministry spokesman Abbas Mousavi slammed the measures on Thursday, calling them “hostile”. The latest move is unlikely to defuse tensions between the two sides that came close to talks during the G7, when US President Donald Trump signalled willingness to meet Iranian President Hassan Rouhani.

Meanwhile, Russia, the largest non-member producer within the Opec+ alliance said it would fully comply with the group’s mandate this month, after its August output had marked an increase.

The alliance, which has been undertaking a cut of 1.2 million bpd since January will meet for a technical committee meeting in Abu Dhabi next week.