Oil slips as trade war worries outweigh Iran sanctions

Oil prices slipped on Friday as concerns over the impact of a global trade war depressed sentiment, although impending U.S. sanctions on Iran and falling Venezuelan output limited losses.

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Benchmark Brent crude oil was down 40 cents a barrel at $77.37 by 1100 GMT. U.S. light crude was 50 cents lower at $69.75.

U.S. President Donald Trump threatened in an interview with Bloomberg News on Thursday to withdraw from the World Trade Organization, his latest salvo in a deepening dispute between the United States and its major trading partners.

Such a move would undermine one of the foundations of the global trading system, which the United States was instrumental in creating.

Economists are worried that rising trade barriers between the world's major economies will drag on global growth and, by extension, erode energy demand.

"You have to wonder if it (crude) can sustain these prices in a world where President Trump doubles down on his battle with the EU and China at the same time," said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

Trump is prepared to ramp up a dispute with China and has told aides he is ready to impose tariffs on $200 billion more Chinese imports as early as next week, Bloomberg reported on Thursday.

However oil markets are tightening with a recent surplus draining, trade figures show.

The volume of unsold crude stored in the Atlantic basin has dwindled from around 30 cargoes to just a handful in recent weeks, a Reuters analysis showed.

Brent is on track for a rise of more than 4 percent in August with U.S. light crude gaining 2 percent.

"The contracts are in a strong uptrend," said Robin Bieber, who watches price charts for brokerage PVM Oil Associates.

Investors are worried that, with Venezuelan supply falling sharply, Iranian crude supply will be cut sharply ahead of the imposition on U.S. sanctions on Tehran in November.

"The November deadline to comply with the U.S. demands for an Iran oil embargo is moving closer, and in anticipation, buyers seemingly have begun reducing their purchases," said Norbert Ruecker, commodity analyst at Swiss bank Julius Baer.

"Venezuela remains equally concerning," he added.

Many analysts say the uptrend in crude prices will continue.

"Brent prices will exceed $80 per barrel before the end of the year," U.S. bank Jefferies forecast on Friday.

(Reporting by Christopher Johnson in London and Henning Gloystein in Singapore; editing by Jason Neely and Susan Fenton)