Oil steady as US-Iran tensions support prices, trade war weighs

NEW YORK: Oil futures were flat on Tuesday as the prospect of US-Iran tensions disrupting supply was offset by concerns that a drawn-out trade war between Washington and Beijing would weigh on crude demand.

Brent crude futures, the international benchmark for oil prices, shed 1 cent to $71.96 a barrel by 1:08 p.m. EDT (1708 GMT)

US West Texas Intermediate (WTI) crude futures were down 13 cents to $62.97 a barrel, ahead of the front month contract for June delivery going off the board on Tuesday. The July contract was trading at $63.08 a barrel.

"The situation with China is as bearish as the Iran situation is bullish. That's why I think we continue to be here in a stalemate," said John Kilduff, a partner at Again Capital LLC in New York.

On Monday, US President Donald Trump threatened Iran with "great force" if it attacked US interests in the Middle East. Washington suspects that militia with ties to Iran organized a rocket attack in Iraq's capital Baghdad.

On Tuesday, Iran said it would resist US pressure, declining further talks under current circumstances.

Iraq's oil minister said a growing conflict in the Middle East poses a challenge to the stability of crude oil markets and said the Organization of the Petroleum Exporting Countries must pave the way for a "new agreement" to help stability.

Tensions have mounted during an already tight market as OPEC, Russia and other producers have withheld supply to support prices since the start of the year in a six-month agreement.

Saudi Arabia on Sunday indicated there was consensus among OPEC and allied oil producers to continue limiting supplies.

OPEC and its allies were considering moving the date of their next oil policy meeting in Vienna to July 3-4 from June 25-26, two OPEC sources said on Monday.

Also adding to market tightness was the closure of a major pipeline in Nigeria and supply disruptions from Russia.

The prolonged tariff fight between the United States and China, however, raised concerns about a global economic slowdown.

Signs that Asian economies were already being pinched by the trade conflict helped to boost the US dollar to a four-week high, making crude more expensive.

Disappointing US economic data that showed existing home sales fell for a second straight month also hampered crude demand sentiment.

The market will watch US oil stockpiles reports on Tuesday afternoon from the American Petroleum Institute (API) and on Wednesday morning from the U.S Energy Information Administration (EIA).

Analysts in a Reuters poll forecast crude inventories fell 2.5 million barrels last week.