Oil prices extend losses on China’s trade threats, recession concerns

China’s State Council Tariff Committee said in a short statement on Thursday that the country has no choice but to ‘take necessary measures to retaliate’, without specifying details.

Oil prices dropped more than 1% on Thursday, extending from the 3% fall the previous day, amid China’s vow to retaliate to the tariff hikes from the United States (US).

China’s State Council Tariff Committee said in a short statement on Thursday that the country has no choice but to ‘take necessary measures to retaliate’, without specifying details.

In tandem, US president Donald Trump said he is expecting a call from Chinese president Xi Jinping “very soon”.

Brent crude oil futures slid as much as US$1.81, to US$57.67 before ending the session US$1.25 lower, at US$58.23. West Texas Intermediate (WTI) closed 76 US cents lower, at US$54.47.

The latest tariff spat is on US$300 billion worth of Chinese goods.

The US said it would delay until mid-December a 10% tariff on some Chinese goods such as laptops and cell phones on Tuesday (August 13, 2019). Meanwhile other goods such as agricultural products, clothes, and footwear will be hit by tariffs from September 1 this year.

Negotiators between both sides have previously also agreed for a call in the coming two weeks to continue with the trade discussions.

In addition to the ongoing trade spat, traders are concerned that the US, the world’s biggest economy could be heading for a recession, as the US Treasury bold yield curve inverted on Wednesday for the first time since 2007.

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