Fresh U.S. tariffs on China likely to weaken oil demand further: BofA

(Reuters) - The latest round of U.S. tariffs on China could weaken global oil demand and could also push Beijing to buy Iranian oil as a retaliation and lower global benchmark Brent crude prices by as much as $20-$30 per barrel, Bank Of America Merill Lynch said on Friday.

"Global oil consumption growth is running at the weakest levels in nearly a decade ... Protectionism has taken a big toll on global industrial activity. We estimate that the latest round of U.S. tariffs on China could weaken global oil demand by an additional 250 to 500 thousand barrels per day," BofA analysts said in a note.

Also, a decision by China to reinitiate Iran crude purchases could send oil prices into a tailspin, the bank added.

"In the extreme, a combination of weaker demand and the return of up to 1.5 million bpd of Iran oil would weaken our balances by up to 2 million bpd," BofA said.

Brent futures were trading about 3% higher at above $62 a barrel on Friday, after slumping more than 7% on Thursday, their steepest drop in more than three years after U.S. President Donald Trump said he would impose additional tariffs Chinese imports starting Sept. 1. [O/R]

China said on Friday it would take countermeasures.

Oil prices were expected to be range-bound near current levels this year as slowing economic growth and a protracted trade dispute curb demand, a Reuters monthly poll showed, squeezing gains stemming from production curbs and Middle East tensions. [O/POLL]

(Reporting by Eileen Soreng in Bengaluru; Editing by Marguerita Choy)

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