By Adedapo Adesanya
The deepening trade war between the United States and China could deal a double shock to the fragile oil market.
Top listed crude like the West Texas Intermediate (WTI) dropped by $1.17 to trade at $54 per barrel.
Brent also followed as it traded below $59 per barrel showing a deficit of 98 Cents.
The tit-for-tat tariffs have already sent crude prices plunging because of fears of a severe global economic slowdown or even recession in the United States that could dent already anemic demand for oil.
US oil prices have tumbled by nearly 7 percent since July 31, the day before President Donald Trump vowed to impose a 10 percent tariff on $300 billion of US imports from China on September 1. Brent, the global benchmark, has plunged by 8 percent.
The latest round of US tariffs on China could wipe out 250,000 to 500,000 barrels per day of global oil demand, Bank of America said. The world’s appetite for oil has already been running at a sluggish pace because of the economic slowdown.
China on Monday allowed its currency to drop sharply below a key psychological level. China’s central bank in part cited the looming US tariffs.
China is also taking further aim at American farmers by announcing Chinese companies have halted purchases of US agriculture goods.
Oil could be in the battle line next. Although Beijing has imposed a 10 percent tariff on US liquefied natural gas, oil has so far avoided tariffs.
Dipo Olowookere