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Oil Slips As Trade War Worries Outweigh Iran Sanctions

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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.

Benchmark Brent crude oil LCOc1 was down 40 cents at $77.37 a barrel by 1310 GMT. U.S. light crude CLc1 was 30 cents lower at $69.95.

U.S. President Donald Trump threatened 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.

Economists worry that rising trade barriers between the world’s major economies will drag on global growth and erode energy demand.

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“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.

Oil analysts cut their price forecasts for 2018 for the first time in almost a year in August, as concerns about the impact of the global trade war deepen, a Reuters poll shows.

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A Reuters survey of 45 economists and analysts forecast Brent would average $72.71 in 2018, 16 cents below the $72.87 projected in July and above the $71.96 average so far this year. The price was forecast to average $72.58 in 2019. [O/POLL]

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.

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

Investors are worried that, with Venezuelan supply falling sharply, Iranian crude supply will be cut sharply ahead of the imposition of 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.

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Business News

Boeing Shares Continue To Slide As Countries Ground 737 MAX Planes

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Boeing Shares Continue To Slide As Countries Ground 737 MAX Planes

Boeing shares have continued to slide on Tuesday as a growing list of countries move to ground the aircraft manufacturer’s 737 MAX model jets after the crash of an Ethiopian Airlines flight on Sunday killing a hundred fifty-seven persons.

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Boeing’s stock price has fallen nearly twelve percent since the accident, erasing roughly twenty-eight billion dollars in value amid concerns the accident could have links to last October’s crash of a 737 MAX 8 operated by Indonesia’s Lion Air. A hundred eighty-nine persons died in that one.

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Although experts warn that it’s too early to know what caused the Ethiopian Airlines crash, both crashes occurred shortly after takeoff. Experts say, that suggests a possible connection.

Bloomberg reports the Boeing 737 is the best selling aircraft in history.  The MAX is its newest version, with more fuel-efficient engines.  It is also generates almost one-third of the airline maker’s operating profit.

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Business News

SA Banks Stop Supply Of US Dollars To Zimbabwe

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SA Banks Stop Supply Of US Dollar To Zimbabwe

South African banks have stopped supplying Zimbabwe with U.S Dollar notes saying they want to avoid risk. They cite Zimbabwe`s loss of a hundred correspondent banking relationships in the past few years because of the country`s high risk rating.

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South African banks have been the major sources of U.S dollars for Zimbabwe since 2009.

Zimbabwe Reserve Bank Director, William Wanimanzi says the development is a result of the country`s failure to follow proper dollarization procedures, signs of which he said are now catching up with the country`s fragile economy. He said the country is not officially dollarized because it does not have an agreement with the United States government to use its currency. He says this will make it difficult to take in cash into the economy.

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African News

Zimbabwe Central Bank Abandons Quasi Dollar

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Zimbabwe Central Bank Abandons Quasi Dollar

Zimbabwe Central Bank has abandoned the quasi dollar it introduced in 2016.  The peg of one Zimbabwe dollar to one US dollar has not worked as the black market rate has been in the range of three and a half to four Zimbabwe dollars to one U.S. dollar.

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Economists say this move could lead to jitters in countries that hold the peg, including Saudi Arabia and Hong Kong.

Zimbabwe has long been dealing with currency instability that in 2009, it introduced the US dollar, euro, and the South African rand as legal tenders it thought would stem the wild round of hyper-inflation.

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