Oil prices fell on Monday on global growth concerns after U.S. President Donald Trump last week threatened China with more tariffs, which could limit crude demand from the world’s two biggest buyers.
Brent crude futures were down $1.31, or 2.12%, at $60.58 per barrel by 1420 GMT.
U.S. West Texas Intermediate (WTI) crude futures were down $0.87, or 1.56%, at $54.79 a barrel.
“The escalation of trade measures only reinforces concerns over global economic growth and hence by extension global oil demand growth,” said Harry Tchilinguirian, global oil strategist at BNP Paribas in London.
“(But) supply fundamentals are tightening and are supportive for oil prices.”
Both crude benchmarks plummeted by more than 7% last Thursday to their lowest level in about 7 weeks after Trump’s announcement, before recovering somewhat to leave Brent down 2.5% on the week and U.S. crude 1% lower.
The escalation of the trade war pushed global equities lower again on Monday, while safe-haven assets, including the Japanese yen, core government bonds and gold, rallied.
Trump last week said he would impose a 10% tariff on $300 billion of Chinese imports starting on Sept. 1 and said he could raise duties further if China’s President Xi Jinping failed to move more quickly towards a trade deal.
The announcement extends U.S. tariffs to nearly all imported Chinese products. China on Friday vowed to fight back against Trump’s decision, a move that ended a month-long trade truce.
On Monday, China let the yuan tumble beyond the 7 per dollar level for the first time in more than a decade, in a sign Beijing may tolerate further currency weakness because of the trade dispute.
A lower yuan would raise the cost of dollar-denominated oil imports in China, the world’s biggest crude oil importer.
Signs of rising oil exports from the United States also pressured prices on Monday. U.S. shipments surged by 260,000 barrels per day (bpd) in June to a monthly record of 3.16 million bpd, U.S. Census Bureau data showed on Friday.
The U.S. weekly oil rig count, an indicator of future production, fell for a fifth week in a row as most independent producers cut spending even though majors were still pushing ahead with investments in new drilling.
Iran’s seizure of an Iraqi oil tanker raised some concerns about potential Middle East supply disruptions in the Gulf, with Iranian state media reporting on Sunday its Iranian Revolutionary Guards had seized the ship for smuggling fuel.