Mubasher: Oil prices dropped on Monday amid remerging global economic growth worries following US President Donald Trump’s threat to slap more tariffs on Chinese products, which would probably hamper fuel consumption in the world’s two biggest crude consumers, Reuters reported.

By 7:45 am GMT, US Nymex crude futures fell by 1.33% to $54.92 per barrel (pb), while global benchmark Brent futures dropped by 1.53% to $60.94 pb.

Both contracts saw drops of 1% and 2.5%, respectively last week.

President Trump said last week he would levy a 10% duty on $300 billion worth of Chinese imports as from 1 September, vowing more tariff hikes if his Chinese counterpart Xi Jinping did not move more quickly toward a trade deal.

The announcement technically extends US levies to almost all of the imported Chinese goods.

In response, Beijing on Friday vowed to counter Trump’s move, leading to a collapse to the month-long trade ceasefire.

Asian stock markets plunged to a six-month trough on Monday as gold prices climbed, with more safe-haven demand.

Moreover, the Chinese yuan (CNY) slid against the US dollar, beyond the CNY 7 level, for the first time in over a decade, indicating that Beijing may tolerate further weakness in the currency due to the trade tussle.

A lower yuan would mean a surge in the costs of China’s dollar-denominated oil imports.

Another bearish factor for oil prices came in the climbing crude exports from the US, with shipments rising by 260,000 barrels per day (bpd) last June to a monthly record of 3.16 million bpd, the US Commerce Department’s Census Bureau said on Friday.

The escalating trade conflict and surging supply should boost the trend of cutting bullish wagers in the US futures markets.

Speculators reduced their bullish positions on US crude in the week ended July 30, while bearish wagers rose to their highest since February, the US Commodity Futures Trading Commission (CFTC) said on Friday.

Meanwhile, speculators raised their bullish bets in Brent futures.

Moreover, the weekly oil rig count in the US dropped for the fifth consecutive week, with the majority of independent producers scaled back investments, despite some key producers proceeding with spending on new drilling.

In the Middle East, Iranian state-run media on Sunday reported that an Iraqi oil carrier was captured by Revolutionary Guards for smuggling fuel, which stoked worries about potential supply disruptions in the Gulf.