U.S. oil slumps as China threatens duty on U.S. crude imports
U.S. oil prices slumped on Monday after China threatened duties on American crude imports in an escalating trade dispute with Washington, Reuters reports.
U.S. West Texas Intermediate (WTI) crude futures CLc1 touched their lowest level since April, falling to $63.59 per barrel before edging back to $63.83 a barrel by 0426 GMT.
That was still down $1.23, or 1.9 percent, from their last settlement.
“Crude oil prices crashed as U.S.-China trade tensions escalated last Friday,” wrote Benjamin Lu of Singapore-based futures brokerage Phillip Futures.
In an escalating spat over the American trade deficit with most of its major trading partners, including China, U.S. President Donald Trump last week pushed ahead with hefty tariffs on $50 billion of Chinese imports, starting on July 6.
China on Friday said it would retaliate by slapping duties on American export products, including crude oil.
“Beijing has retaliated ... with its position as a top importer from the U.S.,” Lu said.
“These punitive measures on bilateral trade have unnerved investors as it hurts global economic growth.”
International oil prices also fell, with Brent crude futures LCOc1 down 76 cents, or 1.1 percent, at $72.67 per barrel.
This was in response to reports that top suppliers Saudi Arabia and Russia would likely increase production.
The producer cartel of the Organization of the Petroleum Exporting Countries (OPEC), which is de-facto led by Saudi Arabia, and some allies including Russia have been withholding output since the start of 2017.
They will meet in Vienna on June 22 to decide forward production policy.
“Most industry observers are expecting a production rise,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA, although he added that “the magnitude and timing of the boost remain uncertain”.