Oil extends losses as us china tariffs take effect
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Oil Extends Losses as US-China Tariffs Take Effect
Oil prices continued to plummet on Monday as the latest round of tariffs imposed by the United States on Chinese goods took effect, sparking concerns about a slowdown in global demand.
West Texas Intermediate (WTI) crude oil futures fell 2.4% to $56.45 per barrel, while Brent crude oil futures dropped 2.2% to $63.45 per barrel. The losses extended a decline that began on Friday, when the US and China announced the tariffs.
The tariffs, which took effect at 12:01 am ET on Monday, are the latest escalation in a trade war between the world's two largest economies. The US imposed 15% tariffs on $112 billion worth of Chinese goods, including electronics, textiles, and plastics, while China retaliated with tariffs on $75 billion worth of US goods, including soybeans, corn, and wheat.
The trade tensions have raised concerns about a slowdown in global economic growth, which could lead to reduced demand for oil. The International Energy Agency (IEA) has warned that the trade war could lead to a decline in global oil demand, which could have a significant impact on the oil market.
"The tariffs are a negative for oil demand, and the trade war is a major risk to the global economy," said Bob Yawger, director of energy futures at Mizuho Securities. "If the trade war escalates, it could lead to a significant decline in oil demand."
The decline in oil prices was also supported by a rise in US oil production, which has been increasing in recent months. The US Energy Information Administration (EIA) reported last week that US oil production reached a record high of 12.2 million barrels per day in August.
The decline in oil prices has also been supported by a rise in the US dollar, which has made oil more expensive for holders of other currencies. The US dollar index rose 0.4% on Monday, which has helped to weigh on oil prices.
Despite the decline in oil prices, some analysts believe that the market is still supported by strong demand from the US and other major economies. "The fundamentals of the oil market are still strong, and we expect demand to remain robust in the coming months," said Amrita Sen, chief oil analyst at Energy Aspects.
Overall, the decline in oil prices on Monday was a result of a combination of factors, including the tariffs, the rise in US oil production, and the strength of the US dollar. However, some analysts believe that the market is still supported by strong demand and that prices could recover in the coming months.