Extent of seriousness of the upcoming oil crisis following Iran's exit

Oil prices fall amid economic slowdown despite ongoing OPEC supply cuts

To prevent oversupply and prop up the market, Opec+, which includes most members of Opec, plus a number of non-Opec producers led by Russian Federation, has since January 1 of this year, been holding back 1.2 million barrels per day from the market. WTI was last down $1.24, or 2.3%, at $52.24 US a barrel, its lowest since February's reading of $52.11, plumbed on Monday.

"That the Saudi energy minister's remarks failed to boost crude prices suggests investors are focusing on trade tensions and USA oil", said Satoru Yoshida, a commodity analyst at Rakuten Securities Inc.in Tokyo.

Financial traders have been selling off energy markets on growing concerns about the outlook for the world economy amid the trade war between the United States and China and USA threats of tariffs on Mexican imports.

West Texas Intermediate near-month futures are down just about 20% since WTI peaked at $66.60 in late April of this year, closing out yesterday at $53.25.

"Saudi Arabia's preference for continuing with, or even deepening, the OPEC+ output cut commitment has also provided a lift to prices", said Abhishek Kumar, Head of Analytics at Interfax Energy in London.

Saudi Energy Minister Khalid al-Falih said on Monday that a consensus was emerging among producers to continue working "to sustain market stability" in the second-half of the year.

This was likely the reason behind the larger than expected build in crude oil stockpiles.

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"Today's oil disconnect from the exceptionally strong equity trade appears to suggest that the oil market is more concerned about global economic growth than the stock market", Jim Ritterbusch of Ritterbusch and Associates said in a note.

While the producers will meet later this month or early July in Vienna to decide on the future of output cuts, Saudi Arabia, the de-facto leader of the cartel, has all but given its go-ahead for an extension. "Nevertheless, the escalating trade war of the United States with China, the European Union and Mexico will cap price gains in the run-up to the OPEC+ meeting".

The ongoing trade war with China has been a prominent factor in the recent slide, causing many investors to sell off energy amid concerns that the U.S.

Oil prices fell on Tuesday amid a global economic slowdown that is starting to hit oil demand, triggering calls in producer club OPEC for supply cuts to be extended.

The Saudi output target under the OPEC-led pact is 10.3 million bpd.

"The stock build does not help sentiment in the current market environment", ING bank said.

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