Investing.com - Oil prices dropped on Monday after U.S. President Donald Trump threatened to increase tariffs on Chinese imports this coming Friday, reviving the risk of a full-blown trade war between Washington and Beijing.
U.S. crude prices were down 0.9% to trade at $61.41 by 08:24 AM ET (12:24 GMT), off 53 cents from their previous settlement, after falling as low as $60.06 earlier.
London traded Brent crude futures were down 0.5% to $70.48, down 40 cents from their last close, but off an intra-day low of $68.89.
Trump said on Twitter on Sunday that tariffs on $200 billion worth of Chinese goods would increase to 25% from 10% on Friday, reversing a decision he made in February to keep them at 10% in the light of progress in trade talks between the two sides.
Oil came under heavy selling pressure after the Wall Street Journal reported China was considering cancelling a round of U.S. talks set for this week in the wake of Trump's comments
However, China said on Monday a delegation is still preparing to travel to the U.S.
"Trump's sudden hard-line on China tariffs has spooked investors, who are scrambling to reduce their risk levels in the markets," said Jasper Lawler, head of research at futures brokerage London Capital Group.
"The prospect of months of trade talks being derailed by Trump has raised concerns over future demand for oil," he added.
Also weighing on oil prices are indications of a further increase in output from the U.S., where crude production has already surged by more than 2 million barrels per day (bpd) since early 2018, to a record 12.3 million bpd. That has made the U.S. the world's biggest producer ahead of Russia and Saudi Arabia.
The number of oil-directed drilling rigs rose by 2 to 807 last week, data from oil services firm Baker Hughes showed on Friday.
--Reuters contributed to this report