Oil Price Drops to $60 over US, China Trade War

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Ejiofor Alike with agency reports

Global oil benchmark Brent futures fell more than two per cent yesterday on global growth concerns after US President Donald Trump last week threatened China with more tariffs, which could limit crude demand from the world’s two biggest buyers.
Brent crude fell $1.38, or 2.2 per cent, to $60.51 per barrel, while US West Texas Intermediate (WTI) crude futures fell 28 cents, or 0.5 per cent to $55.38 per barrel.

Both crude benchmarks plummeted by more than seven per cent last Thursday to their lowest level in about seven weeks after Trump’s announcement, before recovering somewhat to leave Brent down 2.5 per cent on the week and US crude one per cent lower.
Trade war worries hit global equities again yesterday, while stoking a rally in safe-haven assets including the Japanese yen, core government bonds and gold.

Trump last week said he would impose a 10 per cent 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 US 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.

China let the yuan tumble yesterday beyond the seven-per-dollar level for the first time in more than a decade.
A lower yuan raises 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 yesterday.

US shipments surged by 260,000 barrels per day (bpd) in June to a monthly record of 3.16 million bpd, US Census Bureau data showed on Friday.
Lending some support to prices, Iran’s seizure of an Iraqi oil tanker raised concerns about potential Middle East supply disruptions in the Gulf.
Iran will no longer tolerate “maritime offences” in the Strait of Hormuz, its foreign minister said yesterday.