Oil prices weakened yesterday after new tariffs imposed by the United States and China came into force, raising concerns about a further hit to global growth and demand for crude.
Brent crude slipped 16 cents to $59.09 a barrel, while U.S. benchmark WTI crude was down seven cents at $55.03 a barrel.
The U.S. began imposing 15 per cent tariffs on a variety of Chinese goods on Sunday – including footwear, smartwatches and flat-panel televisions – as China put new duties on U.S. crude, the latest escalation in a bruising trade war.
U.S. President Donald Trump said the two sides would still meet for talks this month.
Trump, writing on Twitter, said his goal was to reduce U.S. reliance on China and again urged American companies to find alternative suppliers outside China.
“Even as President Trump has indicated that scheduled talks between the U.S. and China are still to proceed, the market is more and more resigned to a protracted stand-off between the two countries and will be looking toward central bank easing to shore up risk appetite,” BNP Paribas’ Harry Tchilinguirian said.
Beijing’s levy of five per cent on U.S. crude marks the first time the fuel had been targeted since the world’s two largest economies started their trade war more than a year ago.
Elsewhere, oil output from members of the Organisation of the Petroleum Exporting Countries rose in August for the first month this year.
This is, as higher supply from Iraq and Nigeria outweighed restraint by top exporter Saudi Arabia and losses caused by U.S. sanctions on Iran.
In the U.S., energy companies cut drilling rigs for a ninth month in a row to the lowest level since January last year.