Oil prices fall as trade war concerns hit demand outlook

LONDON: Oil prices fell on Monday on renewed global economic growth concerns after US President Donald Trump threatened to escalate a trade war with China with more tariffs, which could limit fuel demand in the world’s two biggest crude consumers. Brent crude futures LCOc1 were down 71 cents, or 1.15 per cent, to $61.18 per barrel by 0840 GMT. US West Texas Intermediate (WTI) crude futures CLc1 were also down 71 cents, or 1.28 per cent, to $54.95 a barrel. “One man, one tweet. That’s all it took for oil prices to suffer their steepest daily decline in several years,” PVM Oil Associates analyst Stephen Brennock said of Trump. Both crude benchmarks fell last week, with Brent down 2.5 per cent and US crude falling 1 per cent after plummeting by more than 7 per cent on Thursday after Trump’s tweet to the lowest level in about seven weeks. “The scene is set for a ramped trade war between both sides. The prospect of an escalating US-China trade war will do no favours for the shaky global economic outlook.” Asian equity markets dropped to a six-month low on Monday while gold prices climbed as investors sought safe-haven assets. Trump last week said he would impose a 10 per cent tariff on $300 billion of Chinese imports starting on September 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. On Monday, China let the yuan tumble beyond the key 7-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. — Reuters