Oil prices rebound after heavy declines over trade dispute

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TOKYO (Aug 9): Oil prices on Thursday eked out gains on concerns about Iranian crude supplies as the US hit Tehran with renewed sanctions, halting the previous session's declines amid the escalating China-US trade dispute and worries over China's demand.

Brent crude futures were up 30 cents, or 0.4%, at US$72.58 barrel by 0417 GMT, following a decline of more than 3% on Wednesday.

US West Texas Intermediate (WTI) crude futures had gained 11 cents, or 0.2%, to US$67.05 a barrel, after dropping 3.22% the previous session.

"The market is supported by concerns the sanctions on Iran are going to reduce Iranian supply," said Tony Nunan, oil risk manager at Mitsubishi in Tokyo.

"The geopolitical risk from Iran is keeping a floor under the price," he said.

The US reimposed sanctions on some industries on Tuesday against Iran, third-biggest producer in the Organization of the Petroleum Exporting Countries (OPEC).

The renewed sanctions won't directly target Iranian oil until November, although US President Donald Trump has said he wants as many countries as possible to cut their imports of the nation's crude to zero.

China is slapping tariffs of 25% on a further US$16 billion in imports from the United States, hitting trade goods from fuel and steel products to autos and medical equipment.

The ongoing trade war is rattling global markets and investors fear any slowdown in the world's two largest economies would slash demand for commodities.

China's crude imports recovered slightly in July after two months of decline, but were still among the lowest this year due to a drop-off in demand from smaller independent refineries.

China, the world's top importer of crude, took 8.48 million barrels per day (bpd) last month, up from 8.18 million bpd a year earlier and June's 8.36 million bpd, customs data showed.

The US Energy Information Administration, meanwhile, reported that crude inventories fell 1.4 million barrels in the latest week, less than half the 3.3 million-barrel draw analysts had expected.

Gasoline stocks notched a surprise rise as well of 2.9 million barrels, not the 1.7 million-barrel drop analysts had predicted in a Reuters poll.