Crude oil declined by more than 3 per cent on Friday as the United States President, Mr Donald Trump, threatened to impose additional tariffs on China.
Brent crude reacted with a $2.49 or 3.82 per cent loss to trade at $62.73 a barrel, and the US West Texas Intermediate (WTI) crude finished at $58.90 a barrel after it went down by $2.61 or 4.24 per cent.
President Trump, who is preparing to meet Chinese President, Mr Xi Jinping, in about three weeks’ time in South Korea, threatened to cancel the meeting, adding he may also impose a massive increase in tariffs on Chinese goods.
The American president threatened to target them back up by imposing a 100 per cent tariff on goods from China “over and above” any existing tariffs.
He disclosed that this would happen on 1 November or sooner, hinting that the move could be accelerated should Chinese officials opt to retaliate.
President Trump complained on social media about what he characterized as China’s plans to hold the global economy hostage, after China dramatically expanded its export controls on rare earth elements on Thursday. China, which is the largest oil importer, dominates the market for such elements, which are essential to tech manufacturing.
The loss of geopolitical risk after Israel and the Palestinian militant group Hamas signed a ceasefire agreement on Thursday in the first phase of President Donald Trump’s plan to end the war in Gaza, added to worries.
Under the deal, which Israel’s government ratified on Friday, fighting will cease, Israel will partially withdraw from Gaza, and Hamas will free all remaining hostages it captured in the attack that precipitated the war, in exchange for hundreds of prisoners held by Israel.
Market analysts noted that the Gaza ceasefire deal means the focus can move back to the impending oil surplus from the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) as well as additional output gains in North and South America.
OPEC+ agreed to hike output by a modest 137,000 barrels per day last Sunday, easing some oversupply concerns.