Oil prices slide as US-China trade war heats up
Despite OPEC production cuts and tensions in the Middle East providing support to oil prices in recent weeks, investors’ concern over the US-China trade spat were enough to send the commodity lower on Wednesday.
Oil prices took a major tumble on Wednesday after Chinese officials said they were prepared to restrict rare earth minerals as the country’s trade war with the US ramps up, leading to investors growing increasingly concerned about how the spat will impact crude demand.
Front-month Brent futures hit $68.68 a barrel at 13:45 GMT, down $1.43 from the previous close, after hitting a session low of $68.08. Meanwhile, US West Texas Intermediate (WTI) futures came in at $57.57 a barrel, representing $1.57 decline, after hitting a low of $57.14 a barrel.
US-China trade fears outweigh OPEC supply cuts
OPEC-led production cuts that took effect in January and ongoing political turmoil in the Middle East have provided significant support to oil prices in since the start of the year.
However, investors fear over the impact of worsening trade relations between the world’s two largest economies outweighed oversupply disruptions.
China prepared to play earth metals trump card
The latest cause of concern for investors in the escalating trade war between the US and China came when Chinese officials signalled that they were prepared to restrict exports of rare earth metals, with the country controlling a dominate position in that market.
‘China is the world’s biggest producer of these highly-prized raw materials and is poised to use them as leverage in its trade spat with Washington,’ London brokerage PVM told Reuters.
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