Brent crude suffers biggest price drop in two years

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…As Port of Virginia Delivers 4th Consecutive Year of Growth***

Oil prices suffered steep falls on Wednesday after Libya said it would boost supply, even as investors fear that trade tensions will hit demand.

Brent crude dropped 6.9% – the biggest decline in more than two years – to end at $73.40 a barrel for the global benchmark.

US crude fell 5% to $70.38 a barrel – its worst one-day decline in a year.

The declines followed a months-long rally that had increased prices to some of the highest levels in recent years.

However, oil prices have been volatile in recent weeks after the US said it would reinstate sanctions against Iran, a major producer.

Wednesday’s sell-off started after the announcement by Libya’s National Oil Corp that it would reopen four export terminals that had been closed since late June, shutting most of the country’s oil output.

The falls came despite a US government report that American crude oil stockpiles fell by more than 12 million barrels last week and are about 4% lower than average for this time of year.

OPEC president Suhail Al-Mazrouei said volatility in oil prices was not desirable: “Fluctuation is not good and we do not like to see lots of fluctuation in the prices.”

Economists are worried that escalating trade tensions between the US and China will hurt the global economy, lowering demand.

On Tuesday, the US unveiled a list of $200bn worth of products to be hit with 10% tariffs, prompting China to vow counter-measures.

The back-and-forth followed tariffs on $34bn of each country’s goods that went into effect last week

While fallout from those measures is expected to be relatively limited, that could change if the fight continues.

China was the world’s biggest oil importer last year, followed by the US.

In the meantime, the Port of Virginia handled 2.8 million TEUs during fiscal year 2018 (FY18), a rise of 2.4 percent when compared with last fiscal year, mostly due to an increase in imports.

The port’s fiscal year closed June 30 and in that month the port handled 223,842 TEUs, which was a drop of 3.4 percent when compared with last June.

As in April and May, June’s volumes were off when compared to the same months last year because of an ongoing effort to limit the number of empty containers flowing across the terminals during construction.

“We finished the fiscal year in positive territory – our fourth consecutive fiscal year of growth,” John F. Reinhart, CEO and executive director of the Virginia Port Authority.

Reinhart added that the port was off from its forecast, mostly due to the effort to limit the empty container imports and exports.

“As a result, our total empty container volume was down by more than 76,000 TEUs. What’s important is that our action is having its desired intent, which is to increase efficiency at the terminals and ensure that loaded containers are our priority right now.”

The port is currently in the midst of a USD 700 million capacity expansion at its two primary container terminals, Virginia International Gateway (VIG) and Norfolk International Terminals (NIT).

“Our expansion is on schedule and on budget … And, we have the federal approval to begin the process to widen and deepen the commercial shipping channels serving the Norfolk Harbor,” Reinhart concluded.

BBC with additional report from World Maritime News