New Delhi, As Iran and the six world powers reached a nuclear agreement by their deadline, crude oil prices fell further on Tuesday, pulled down by prospects of easing of sanctions imposed on the Persian Gulf nation.
London Brent crude dropped to $56.96 a barrel of nearly 160 liters, while US crude was trading down at $51.12. The Indian basket crude oil traded on Monday, the deadline for the nuclear deal, at $57.19 per barrel.
The Indian basket had fallen last Tuesday to $56 a barrel, as China’s stock market-plunged and the Greek crisis revived the specter of weaker economic growth that could impact oil demand.
China’s economic growth in the second quarter is forecast to be the weakest since the 2008-2009 global financial crisis.
The International Energy Agency said last week that Iran has at least 17 million barrels of crude oil stored and ready to be shipped.
“Iran would seek to increase its oil exports to the global market if a nuclear deal is reached and the western sanctions are lifted,” Iranian Oil Minister Bijan Zangeneh said recently.
He said Iran can restore its production of one million barrels per day fairly quickly, which supply can hit the market in less than six months.
This would add to output from the Organization of Petroleum Exporting Countries (OPEC) whose production levels are already at a three-year high, at a time when the market remains quite over supplied.
OPEC released its monthly oil market report on Monday, with Saudi Arabia reporting a record crude oil production of 10.6 million barrels per day (bpd) in June, an increase of more than 200,000 bpd on the previous month.
Stable crude oil prices in the international markets would help India manage its macro-economy well, chief economic adviser Arvind Subramanian has said.
“I do not see oil prices going beyond $80-85 a barrel (about 160 liters), given the fundamental changes in the market. If oil prices remain steady even at that ($80-85) level, I think we can manage the economy well,” Subramanian said at a lecture late last month at the Bangalore International Center.
“Besides decline in our oil import bill, we have seen fundamental shifts in the international market, which has helped crude oil prices remain steady,” he said.
A broad range of U.S. companies told a hearing in Washington on Monday that they have few alternatives other than China for producing clothing, electronics, and other consumer goods as the Trump administration prepares 25% tariffs on remaining U.S.-China trade.
The comments came on the first of seven days of hearings that began on Monday, held by the U.S. Trade Representative’s Office (USTR), on President Donald Trump’s plan to hit another $300 billion worth of Chinese imports with tariffs.
Sourcing from other countries will raise costs, in many cases more than the 25% tariffs, some witnesses told a panel of U.S. trade officials from USTR, the Commerce Department and other federal agencies.
Mark Flannery, president of Regalo International LLC, a Minnesota-based maker of baby gates, child booster seats and portable play yards, said that pricing quotes for shifting production to Vietnam – using largely Chinese-made steel – were 50% higher than current China costs, while quotes from Mexico were above that.
“Currently there’s no country manufacturing metal baby gates outside of China,” Flannery said.
Child safety products such as car seats were spared from Trump’s previous tariffs on $200 billion worth of Chinese goods, imposed in September 2018. But in the drive to pressure China in trade negotiations, USTR put them back on the list, along with other products spared previously, from flat-panel televisions to Bluetooth headphones.
The proposed list, which will be ready for a decision by Trump as early as July 2, includes nearly all consumer products, and could hit Christmas sales hard, particularly cell phones, computers, toys and electronic gadgets.
Marc Schneider, chief executive of fashion footwear and apparel marketer Kenneth Cole Productions, said 25 percent tariffs would wipe out the company’s profits and cost jobs. With China producing 70 percent of the shoes bought in the United States, there were no alternatives, including India and Vietnam, that could match China’s quality, price and volume, he said.
“We’re going to lower the quality of footwear, raise prices and accomplish nothing by moving it around to other countries,” Schneider said.
In a letter addressed to the USTR ahead of Monday’s hearing, clothing retailer Ralph Lauren Corp asked for apparel and footwear to be removed from the tariff list, arguing that a rise in duties would lower sales and lead to U.S. workers losing their jobs.
Jean Kolloff, owner of cashmere importer Quinn Apparel, said her reason for opposing the tariffs was geographical – the Alashan goat that produces light-colored cashmere wool is only found in China’s Inner Mongolia region.
“We searched for similar species of goat in an attempt to copy the hair from this animal in other countries or even domestically, but to no avail,” she said.
The tariff hearings are underway amid a severe deterioration of U.S.-China relations since Trump accused Beijing in early May of reneging on commitments that had brought the world’s top two economies close to a deal to end their nearly year-long trade
Since then, Trump raised tariffs to 25% on $200 billion of Chinese goods. The $300 billion list of products being reviewed in the hearing would bring punitive tariffs to nearly all remaining Chinese exports to the United States.
Trump has said he wants to meet with Chinese President Xi Jinping during the June 28-29 G20 leaders summit in Japan, but neither government has confirmed a meeting.
The list of more than 300 scheduled witnesses includes representatives from retailer Best Buy, toy maker Hasbro Inc, vacuum cleaner maker iRobot, faucet maker Moen, and other firms and trade groups in a diverse range of industries.
Not all of the witnesses on the first day of the hearing were opposed to the tariffs. Mike Branson, president of Rheem Manufacturing Co’s air conditioning division, asked Trump administration officials to close a loophole that was allowing Chinese firms to skirt air conditioner tariffs by shipping condenser and air handler units separately.
This allowed the units to be imported duty free as parts, rather than as completed units that were subject to tariffs.
Domestic manufacturers had ample capacity to make these products, Branson said. (VOA)