Oil prices were little changed in early Asian trade on Friday after falling more than 1% in the previous session.
Chunyip Wong | E+ | Getty Images
U.S. crude oil fell 4% on Friday, after President Donald Trump threatened China with higher tariffs in retaliation for Beijing imposing stricter export controls rare earth minerals.
U.S. crude oil dropped $2.61, or 4.24%, to close at $58.90 per barrel. Global benchmark Brent was down $2.49, or 3.82%, to settle at $62.73 per barrel. China-U.S. trade relations were thought to be improving slowly, but this latest setback once again raised concerns higher tariffs may slow the global economy and hurt demand for oil.
“I will be forced, as President of the United States of America, to financially counter their move,” Trump said on his social media platform Truth Social.
“One of the Policies that we are calculating at this moment is a massive increase of Tariffs on Chinese products coming into the United States of America,” the president said. “There are many other countermeasures that are, likewise, under serious consideration.”
Trump’s comments knocked the stock market down Friday as investors took off risk on this renewed threat to the global economy.
Crude oil, 1 day
“When the market sees these tit-for-tat actions, for the oil market it translates into slower growth and perhaps even declining demand,” Andy Lipow, president of Lipow Oil Associates, told CNBC.
Oil prices have also been under pressure as OPEC+ has been increasing supply to the market for months.
“Oil on the water spiked last month, crude demand is dropping significantly amid refinery maintenance, and inventory builds are about to start,” said Matt Smith, an oil analyst at Kpler.
A ceasefire between Israel and Hamas also appears to have taken effect in Gaza. The oil market has been on edge repeatedly over the past two years about the risk of the Gaza war boiling over into a regional conflict that could disrupt crude supplies.
“Market participants are taking the opportunity to basically say, we can move on from geopolitics and refocus on the supply picture,” Helima Croft, head of global commodity strategy at RBC Capital Markets, told CNBC.