Oil prices fell sharply on Wednesday, hammered by an escalating trade dispute between the United States and China, weak Chinese import data and a smaller-than-anticipated drop in American crude stockpiles.
U.S. West Texas Intermediate (WTI) crude futures fell to a nearly seven-week low during the session and were last trading down $2.63, or 3.8 percent, at $66.54.
Front-month Brent crude oil futures was down $2.52, 3.4 percent, at $72.13 a barrel by 11:51 a.m. ET (1551 GMT).
China on Wednesday threatened to slap a 25 percent tariff on $16 billion of U.S. goods. The move came in response to the Trump administration’s plan to slap the same tariff on an equal amount of Chinese imports in the coming weeks.
The mounting trade tension has raised concerns that global economic growth will slow, lowering demand for crude oil in the process.
The list of U.S. goods released by China on Wednesday includes diesel, fuel oils and other petroleum products. China has already taxed U.S. crude imports and announced plans on Friday to place tariffs on U.S. liquefied natural gas.
Earlier on Wednesday, government data showed China’s imports of crude oil in July rose slightly after falling in the previous two months. However, July imports still ranked as the third lowest monthly level this year, Reuters reported.
Traders were also scrutinizing weekly data on U.S. crude stockpiles, which showed inventories fell by 1.4 million barrels in the week through Aug. 3.
Analysts in a Reuters poll had expected stocks to drop by 3.3 million barrels. An earlier report from industry group the American Petroleum Institute had suggested inventories fell by 6 million barrels.
Meanwhile, stockpiles of gasoline and distillates, which include diesel and heating oil, rose more than expected.
U.S. gasoline futures fell 3.8 percent to $2.025 per gallon.
The market appeared to move past the renewal of U.S. sanctions against Iran, the world’s fifth largest oil producer, which underpinned crude futures in the previous session.
Sanctions on Iran’s energy industry do not go back into effect until November, but analysts say the first round of sanctions that snapped back into place on Tuesday illustrated Washington’s willingness to follow through on plans to hammer Iran’s economy.