Oil Prices Fall as Trump Threatens to Levy New Tariffs on China

© Reuters. Oil prices fell on Wednesday

Investing.com – Oil prices fell on Wednesday after Washington threatened to levy new trade tariffs on China, just a few days after both countries imposed tit-for-tat tariffs on $34 billion of each other's goods.

The U.S. said it would impose tariffs on an extra $200 billion worth of Chinese imports on Tuesday. President Donald Trump had warned earlier that his country may ultimately impose tariffs on more than $500 billion worth of Chinese imports.

Crude Oil WTI Futures for August delivery were trading at $73.67 a barrel at 12:40AM ET (04:40 GMT), down 0.6%. Brent Oil Futures for September delivery, traded in London, were also down 0.81% at $78.22 per barrel.  

“The trade concerns have bitten today and the reason is that this is above and beyond what the market was expecting,” said Michael McCarthy, chief markets strategist at CMC Markets in Sydney.

The bearish mood was also fuelled by news that U.S. Secretary of State Mike Pompeo said the White House would consider extending sanctions relief to some oil buyers of Iranian crude beyond the previously announced November deadline.

Pompeo remarks were in sharp contrast to comments from the U.S. State Department just two weeks ago, warning countries to halt all imports of Iranian oil from Nov. 4 or face U.S. financial measures, with no exemptions.

Investor fears that the loss of Iranian crude could be less than initially anticipated, reducing the prospect of a meaningful global supply shortage, overshadowed reports about a fresh supply outage.

Oil prices were also weighed down by expectations for a continued uptick in U.S. production.

The U.S. Energy Information Administration raised its 2019 estimate on U.S. crude-oil production, according to the agency's July short-term Energy Outlook report released Tuesday.