* Lower Iran exports, North Sea and OPEC cuts support prices
* Trade tensions keep Wall Street, oil under pressure
* OPEC-led panel meets on Sunday to review supply pact
* U.S. oil drillers cut rigs to lowest count since March
2018
(Updates to settlement)
By Devika Krishna Kumar
NEW YORK, May 17 (Reuters) - Oil prices edged lower on
Friday due to demand fears amid a standoff in Sino-U.S. trade
talks, but both benchmarks ended the week higher on rising
concerns over supply disruptions in Middle East shipments due to
U.S.-Iran political tensions.
Iran said on Friday it could "easily" hit U.S. warships in
the Gulf, the latest in days of sabre-rattling between
Washington and Tehran, while its top diplomat worked to counter
U.S. sanctions and salvage a nuclear deal denounced by President
Donald Trump. U.S. sanctions on Iran have already cut the OPEC member's
crude exports further in May, adding to supply curbs implemented
through an OPEC-led pact for the first six months of the year.
Brent crude LCOc1 fell 41 cents, or 0.6%, to settle at
$72.21 a barrel. The global benchmark notched a weekly gain of
about 2%, having ended last week largely steady and fallen the
week before.
U.S. West Texas Intermediate crude CLc1 fell 11 cents to
end the session at $62.76, and gained about 1.7% on the week.
Oil prices came under pressure on Friday from seesawing U.S.
equity markets .DJI due to fears over global economic growth
amid the escalation of a trade war between the world's top
economies. .N
Chinese media took a hardline approach to the tariff dispute
between the Washington and Beijing, saying the trade war will
only make China stronger and will never bring the country to its
knees.
"Despite what we view as a balanced oil market both
domestically and globally, oil pricing is apparently still
sensitive to evolving developments in the Persian Gulf where
occasional minor military events are slowly cranking up
geopolitical risk premium," said Jim Ritterbusch, president of
Ritterbusch and Associates.
Iran's foreign ministry on Friday rejected accusations by
Saudi Arabia that Tehran had ordered an attack on Saudi oil
installations claimed by Yemen's Iran-aligned Houthi militia.
Iran's elite Revolutionary Guards (IRGC) are "highly likely"
to have facilitated attacks last Sunday on four tankers
including two Saudi ships off Fujairah in the United Arab
Emirates, according to a Norwegian insurers' report seen by
Reuters. A Saudi-led military coalition in Yemen carried out several
air strikes on the Houthi-held capital Sanaa on Thursday.
"When tensions are this high, with the U.S. deploying a
sizeable military force, even a mistake or a tactical error by
Iran could ignite the Middle East powder keg," Stephen Innes,
head of trading and market strategy at SPI Asset Management,
told Reuters by email.
"There are lots of supply risks with tensions this high."
Besides the drop in Iranian exports, Russian shipments have
been disrupted and the North Sea - home to the crude
underpinning Brent futures - is also in tighter supply owing to
oilfield maintenance and outages. The market is also awaiting a decision from the Organization
of the Petroleum Exporting Countries (OPEC) and other producers
over whether to continue with supply cuts that have boosted
prices more than 30% so far this year.
A meeting of an OPEC-led ministerial committee in Saudi
Arabia this weekend will assess member states' commitment to
their deal to reduce oil production and could make a
recommendation on whether to extend or adjust the pact.
The mounting Middle East tensions overshadowed bearish
developments for oil prices this week, such as an unexpected
increase in U.S. crude inventories and consistently record-high
production levels.
However, U.S. energy firms this week reduced the number of
oil rigs operating for the second week in a row, with the rig
count at its lowest since March 2018, as some drillers follow
through on plans to cut spending. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
OPEC Oil Production Capacity png https://tmsnrt.rs/2WJleV2
TECHNICALS-Brent oil may end bounce around $73.51-$73.80 range
ID:nL4N22T09K
TECHNICALS-U.S. oil may rise further into $63.96-$64.90 range
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