The prices of crude oil could fall by as much as $30 a barrel if China decides to buy the oil from Iran in retaliation to the latest US tariff measures, according to the Bank of America (BofA) Merill Lynch, reports CNBC.
“While we retain our $60 a barrel Brent forecast for next year, we admit that a Chinese decision to reinitiate Iran crude purchases could send oil prices into a tailspin,” a BofA Merrill Lynch Global Research report said.
According to the report, the research by the BofA Merill Lynch also warned that if China goes ahead with buying Iranian oil, the crude prices could sink by as much as $20-30 in that scenario.
Following United States President Donald Trump’s threat to slap a 10 per cent tariff on $300 billion dollars worth of Chinese goods, the Chinese Ministry of Commerce has also threatened countermeasures for the proposed US move.
As per the report, analysts have cautioned that oil volatility is set to rise again as markets await Chinese response to the latest US tariff threat. The response by China could reportedly include purchasing Iranian oil.
“This decision would both undermine US foreign policy and cushion the negative terms-of-trade effects on the Chinese economy of rising US tariffs,” the report added.
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