Oil prices fall on Trump’s latest China trade threats

Oil prices fell by about 2 percent on Friday after US President Donald Trump threatened new tariffs on China, reigniting fears of a trade war between the world’s two largest economies that could hurt global growth.

Trump said on Thursday he had ordered US trade officials to consider tariffs on an extra $100 billion worth of imports from China, escalating tensions with the Asian economic powerhouse.

China warned on Friday it was fully prepared to respond with a “fierce counter strike” of fresh trade measures if the US follows through on Trump’s threat.

“The heightened possibility of an outright tariff war is conjuring up images of slowed economic growth that could curtail the strong oil demand that has helped to revive a strong pricing environment during the past couple of months,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

Brent crude LCOc1 futures settled down $1.22 at $67.11 a barrel while US West Texas Intermediate (WTI) crude CLc1 futures fell $1.48 to $62.06 a barrel, a 2.3 percent loss.

Brent crude dropped 2.8 percent throughout the week while US crude fell 4.4 percent. US stock indexes also fell on trade war jitters, which weighed on oil prices.

Organization of the Petroleum Exporting Countries (OPEC) member Libya is currently producing 1.05 million barrels per day (bpd), despite a continuing outage since February at its 70,000 bpd El Feel oilfield, a Libyan oil source told Reuters on Friday.

US drillers added 11 oil rigs in the week leading up to April 6, bringing the total count up to 808, the highest level since March 2015, said General Electric Co’s energy services firm Baker Hughes in its closely followed report released on Friday.

The Permian basin in Texas is leading the way as US oil production has reached an all-time high, but the prolific output is causing bottlenecks as pipelines transporting the crude have filled up more quickly than expected, depressing prices in the region.