Mubasher: Oil prices dropped on Monday, with US futures hitting a more than two-week bottom, as the escalating trade conflict between the US and China weighed on the outlook of global economic growth, Reuters reported.

By 7:23 am GMT, US Nymex crude futures fell by 0.44% to $53.93 per barrel (pb), after diving to $52.96 pb, the lowest level seen since 9 August, while global benchmark Brent futures declined by 0.22% to $59.21 pb.

The latest escalation in the trade war between the world’s top two economies have sent a shudder of fear among markets against a back drop of a global economic downturn.

China’s Ministry of Commerce announced late last week it would levy additional tariffs of 5% or 10% on a total of 5,078 products imported from the US, comprising crude oil, agricultural goods such as soybeans, and small aircraft.

In response, President Donald Trump said he ordered US firms to consider ways to close operations in China and produce their goods in the US.

“The only thing that will lift the storm clouds over oil markets this week will be if both China and the U.S. talk and decide to mutually take a step back,” OANDA market analyst Jeffrey Halley was quoted by Reuters as saying, while he dismissed the possibility that this would “happen.”

In addition, Federal Reserve Chair Jerome Powell barely offering clues about whether the US central bank would slash interest rates at its next meeting, saying during an annual seminar at Jackson Hole, that the US economy in a “favourable place.”

Powell vowed that the Fed would “act as appropriate” to maintain the current “economic expansion on track.”

US energy firms scaled back the biggest number of oil rigs since almost four months last week, with the total count falling to the lowest since January last year.

This came as a result of producers cutting spending on new drilling and completions.