Oil prices fell on Monday on global growth concerns after U.S. President Donald Trump threatened China with more tariffs, which could limit crude demand from the world’s two biggest buyers.
Brent crude futures LCOc1 were down 71 cents, or 1.15 per cent, to $61.18 per barrel by early trading.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 56 cents, or 1.01 per cent to $55.10 a barrel.
“The escalation of trade measures only reinforces concerns over global economic growth and hence by extension global oil demand growth,’’ Harry Tchilinguirian, global oil strategist at BNP Paribas in London, said.
“But supply fundamentals are tightening and are supportive for oil prices.’’
Both crude benchmarks fell last week, with Brent down 2.5 per cent and U.S. crude falling one per cent after plummeting by more than seven per cent on Thursday, after Trump’s tweet to the lowest level in about seven weeks.
Trump last week said he would impose a 10 per cent tariff on $300 billion worth 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 seven-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.