Mubasher: Oil prices extended their declines early Monday from last week after China threatened to levy duties on US crude imports, escalating trade the spat with Washington.

Expectations that the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC allies, including Russia, would ramp up supply also contributed to the falling prices.

Global benchmark Brent crude dropped $0.46 to $72.98 per barrel (pb) from their last settlement, while US Nymex futures fell to $63.59 pb, tapping their lowest level since April, before edging back to $63.98 pb.

Last week, US President Donald Trump announced hefty tariffs on $50 billion of Chinese goods, starting from 6 July, while China said that it would retaliate with duties on American products, including crude imports.

Given that China is a major US crude importer, “these punitive measures on bilateral trade have unnerved investors as it hurts global economic growth,” Singapore-based futures brokerage Phillip Futures’ commodities analyst Benjamin Lu told Thomson Reuters.

It is worth noting that Washington’s oil exports have spiked in the last two years, with China receiving the largest amount of US crude imports which are worth $1 billion per month.

Moreover, reports that OPEC’s de facto leader Saudi Arabia and Russia, the world’s major oil producers, would boost production weighed on prices, while an OPEC meeting on 22 June in Vienna would decide the production policy that would be implemented.

However, “the oil market remains in deficit [...] requiring higher core OPEC and Russia production to avoid a stock-out by year-end,” Goldman Sachs said, predicting that the output rise would be by 1.3 million barrels per day (bpd) by the end of this year, and by another 500,000 bpd in the first half of 2019.

By 7:42 am GMT, Brent crude fell 0.50% to 73.07 pb, while Nymex future crude dropped 1.61% to 64.01 pb.