US oil touches lowest level since April on tariff threats
US oil prices slumped on Monday after Beijing threatened duties on American crude imports in an escalating trade dispute with Washington.
US West Texas Intermediate (WTI) crude futures touched their lowest level since April, falling to $63.59 per barrel.
“Crude oil prices crashed as USChina trade tensions escalated last Friday,” wrote Benjamin Lu of Singapore-based futures brokerage Phillip Futures.
In an escalating trade spat over the American trade deficit with most of his country’s major trading partners, including China, US President Donald Trump last week pushed ahead with hefty tariffs on $50 billion worth of Chinese imports, due to start on July 6.
China on Friday said it would retaliate by slapping duties on US imports, including crude oil.
“This is a big deal. China is essentially the largest customer for US crude now, and so for crude it’s an issue, let alone when you involve [refined] products, too. This is obviously a big development,” said Matt Smith, director of commodity research at crude analyst firm ClipperData.
China currently imports about 363,000 barrels of US crude every day, on par with Canada as the biggest US crude importer, according to US Energy Department figures. It also takes in an additional 200,000 barrels a day of other products like propane.
International oil prices also fell Monday, with Brent crude futures 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 are likely to increase production.
The Organization of the Petroleum Exporting Countries, which is de-facto led by Saudi Arabia, and some of its allies including Russia have been withholding output since the start of 2017.
They will meet in Vienna on June 22 to decide future production policy.
“Most industry observers are expecting a production rise,” said Stephen Innes, head of trading for AsiaPacific at futures brokerage OANDA, although he added that “the magnitude and timing of the boost remain uncertain.”