Crude oil prices may slump to $30 level if China devalues yuan: BofAML

By Dan Murtaugh and Livia Yap

A further deterioration in relations between the US and China could set off a chain of events that would push oil down more than 50 per cent to as low $30 a barrel, according to Bank of America Merrill Lynch.
President Donald Trump may decide to raise tariffs on the remaining $300 billion of Chinese imports if he doesnt like what he hears from Chinese President Xi Jinping at this weekends G-20 summit in Osaka, Francisco Blanch, the banks global head of commodities, said in an interview in Singapore.

That may cause Chinese authorities to let the yuan weaken, making oil thats priced in dollars more expensive in the worlds largest importer and stunting demand growth, he said. Beijing might also decide to ignore Washingtons sanctions against Iran and resume crude imports from the Persian Gulf country, Blanch said.

“The trade issue and the Iran issue become the same issue, and that ends up creating a $30-a-barrel scenario for oil prices,” he said. “You get an extra 2 million barrels from Iran and demand collapses, where do you think prices are going to go?”

Blanch said the scenario wasnt particularly likely, but wasnt crazy either. BofAMLs base-case scenario is for Brent and West Texas Intermediate to average $63 and $56 a barrel, respectively, in the second half of the year.

Brent crude fell 20 per cent from a high in late April to a low on June 12, largely as a result of the worsening trade war. It has Read More – Source

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