By Adedapo Adesanya
Oil futures tumbled more than four percent on Wednesday night as United States-China tensions took a turn as the US President, Mr Donald Trump, hinted that Washington was ready to respond to some previous lines of action taken by Beijing.
As a result, the international benchmark, Brent crude, contracted by 4.4 percent or $1.59 to $34.58 per barrel, while the US West Texas Intermediate (WTI) fell as much as 5.09 percent or $1.75 to $32.73 per barrel.
The US President leader said he was working on a strong response to China’s proposed security law in Hong Kong.
At a White House news briefing, Mr Trump was asked if he planned sanctions against China over Hong Kong and if he intended to put restrictions on visas for students and researchers from the country.
“We’re doing something now. I think you’ll find it very interesting. I’ll be talking about it over the next couple of days,” he replied.
Pressed if this would include sanctions, he said: “No, it’s something you’re going to be hearing about before the end of the week, very powerfully, I think.”
Mr Trump did not elaborate, but White House spokeswoman, Ms Kayleigh McEnany, said earlier that the President was displeased by the proposed security law and found it hard to see how Hong Kong can remain a financial hub if China takes over.
Also, depressing prices was doubts by some traders over Russia’s commitment to deep production cuts.
The group known as OPEC+, which Russia is a co-chair of, is cutting output by nearly 10 million barrels per day (bpd) in May and June but there are reports that Moscow wants to ease supply.
According to reports, the country wants to scale back curbs in line with the OPEC+ deal. A Kremlin spokesman said Russia would analyse the market before making any decision at a June 9-10 OPEC+ meeting.
Members of the cartel and its allies will meet next month to analyse the level of compliance and map out strategies moving forward.
Despite the recent boost in demand and optimism over economies recovering, there are some warning signals. Demand for gasoline fell 25 percent to 35 percent from a year earlier, latest figures showed.
Gloomy forecasts over the economic impact of the pandemic also continued to weigh on crude prices.
