Oil prices steadied on Friday as concerns that a global trade dispute will slow economic growth and demand for fuel were balanced by U.S. sanctions against Iran that look set to tighten supply.
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Benchmark Brent crude oil was up 20 cents at $72.27 a barrel by 1120 GMT. U.S. light crude was 10 cents higher at $66.91 a barrel.
"Sentiment is sandwiched between fears that a U.S.-China trade dispute will hurt oil demand and looming Iranian supply shortages," said Stephen Brennock, analyst at London brokerage PVM Oil Associates.
Escalating trade disputes are casting a shadow over the outlook for economic growth and pushing up the dollar, the currency in which oil is traded internationally, making it more expensive for consumers using other currencies.
Major emerging economies including China, India and Turkey have seen their currencies slump.
"Oil, like other commodities, is responding to dollar strength," Harry Tchilinguirian, head of oil strategy at French bank BNP Paribas in London, told the Reuters Global Oil Forum.
For the week, Brent is set for a near 2 percent fall, while U.S. light crude is heading for a drop of nearly 3 percent.
"The market seems to be focused on fears of reduced demand from China, partially due to the effects of the trade wars between China and the United States," said William O'Loughlin, investment analyst at Australia's Rivkin Securities.
In the latest round of levies, China said it would impose additional tariffs of 25 percent on $16 billion worth of U.S. imports.
Although crude was removed from the list, replaced by refined products and liquefied petroleum gas, analysts say Chinese imports of U.S. crude will fall significantly.
But these worries are balanced by the introduction of U.S. sanctions against Iran, which from November will include oil exports and are likely to tighten global supply.
Although the European Union, China and India oppose sanctions, many are expected to bow to U.S. pressure.
Analysts expect Iranian crude exports to fall by between 500,000 and 1.3 million barrels per day, with buyers in Japan, South Korea and India already dialing back orders.
The reduction will depend on whether buyers of Iranian oil receive waivers that would allow some imports.
The International Energy Agency said on Friday the oil market could see more turbulence later this year.
"The recent cooling down of the market, with short-term supply tensions easing, currently lower prices, and lower demand growth might not last," the IEA said in a monthly report.
"As oil sanctions against Iran take effect, perhaps in combination with production problems elsewhere, maintaining global supply might be very challenging."
(Reporting by Christopher Johnson in London and Henning Gloystein in Singapore; Editing by Dale Hudson)