By Shadia Nasralla
LONDON (Reuters) – Oil prices became thinner lower on Tuesday, balanced by concerns over falling raw demand and a Saudi promise to compensate for any deficiencies from countries hit by sanctions, as the market dared to deliver on tensions around Iran.
Benchmark futures were down 42 cents at $ 64.44 per barrel at 1
futures fell 32 cents to $ 57.58 per barrel.
Hopes for progress in the trade war between China and the United States during this week's G20 meeting were subdued by an older US official, said President Donald Trump "comfortable with any outcome" from the talks.
CEO of Saudi Aramco, the state oil company of OPEC's de facto leader, said that the available capacity of 12 million barrels per day (bpd) was sufficient and that it would meet customer needs.
Weak production data released on Monday by the Federal Reserve Bank by Dallas adds concerns about reducing the demand for crude oil due to the trade conflict.
"The geopolitical risk premium (in the Middle East) is partly offset by another stand-off, namely between the US and China," PVM analyst Tamas Varga said in a note.
"The general consensus is that no breakthrough will take place towards the end of the week when the two leaders continue their trade negotiations. The likely failure to reach a mutually acceptable trade agreement will increase the demand concerns that will counteract the oil spill."
Demand problems were cards defeated last week when Brent climbed 5% and US crude oil increased nearly 10%, the strongest week since 2016, after Iran shot down an American drone, and increased the excitement of previous attacks on oil tankers in the area.
Washington has blamed the tank attacks on Iran, which refuse to play a role.
US President Donald Trump measured the Iranian supreme leader Ayatollah Ali Khamenei and other senior Iranian officials on Monday. Iran said this move closed the way for diplomacy.
At the same time, the organization of the petroleum exporting countries and its allies sees Russia, among other things, expanding an agreement to reduce production when they meet on 1-2 July.
Russian Energy Minister Alexander Novak said international co-operation on crude production had helped to stabilize the oil markets and was more important than ever. He also expressed concerns about the demand.
U.S. Sanctions against Iran and Venezuela have cut oil exports from the two OPEC members, but US production has risen, causing some Russian officials to accuse Washington of separating market shares for their energy exports.
(Interactive graphic about oil sanctions: https: //tmsnrt.rs/2FA66mz)
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