World oil prices fell below 120 dollars a barrel on Tuesday, a day after hitting the trough for the first time for three months, as slowing US demand for energy offsets tensions over crude-rich Iran, traders said.
Brent North Sea crude for September delivery dropped by 1.60 dollars a barrel to 119.08 dollars in electronic trading.
New York’s main contract, light sweet crude for September shed 1.40 dollars to 120.01 dollars a barrel.
Oil prices had Monday fallen below 120 dollars for the first time since early May after US economic indicators emphasised weakness in the world’s biggest economy, dealers said.
The monthly US Commerce Department survey showed consumer spending, which fuels two-thirds of output, had cooled in June while inflationary pressures accelerated.
The US is the world’s biggest user of energy and any signs of slowing consumer spending tends to weigh on global oil demand projections.
Tropical Storm Edouard, expected to make landfall Tuesday, will likely provide only a limited boost to prices as investors are more concerned with American oil demand, analysts said.
Meanwhile tensions over Iran’s nuclear programme surged Monday after it missed a deadline over the weekend to respond to an international package of incentives aimed at persuading Tehran to freeze uranium enrichment.
The US State Department said it and the five other powers holding nuclear talks with Iran had threatened to pursue new punitive action against Tehran.
Iran has refused to suspend uranium enrichment it says is aimed solely at producing fuel for nuclear power production.
The United States and its allies fear the programme is a cover for developing nuclear weapons.
Iran is the world’s fourth-biggest crude oil producer and traders fear supply disruption from the Islamic republic if tension is further heightened.
(AFP & Zawya)