(Bloomberg) -- Crude tumbled for a third day in a row as the escalating trade tiff between the world’s two biggest economies dimmed the outlook for demand.
Futures in New York fell 1%, joining a rout for equity markets. China announced higher tariffs on a range of American goods Monday, responding to new levies promised by the Trump administration after talks ended on Friday without a deal. That erased an earlier jump after Saudi Arabia said its oil tankers were sabotaged near the Persian Gulf on Sunday.
“It’s fears related to trade," said Stewart Glickman, an energy analyst at CFRA Research Inc. “Most of the incremental demand we expect to get in the oil market is supposed to come from the emerging market."
West Texas Intermediate for June delivery sank 62 cents to $61.04 on the New York Mercantile Exchange at the close of trading, after earlier rising 2.7%. Brent crude for July settlement slid 39 cents to $70.23 a barrel on the London-based ICE Futures Europe exchange.
Beijing announced a new 25% tariff on almost 2,500 American products, including liquefied natural gas shipments. Markets recovered some of their ground after President Donald Trump indicated he’ll speak with China’s Xi Jinping at the end of June during the G-20 summit. Trump said he hasn’t yet decided whether to follow through on a threat of further penalties against $300 billion in Chinese imports.
Crude was not on China’s tariffs list, but the flow of American cargoes to China has already been throttled. China imported 1.64 million barrels of American oil in the six months through March -- down from 60.5 million barrels in the prior six months. Four of the most recent saw no shipments at all.
Worries about demand overrode fears that tensions in the Middle East could be coming to a boil after the Saudis said two of their tankers were damaged in “a sabotage attack.” The United Arab Emirates said a U.A.E. vessel and a Norwegian ship were also targeted off the Emirati port of Fujairah.
Details remained sparse, however, with neither the Saudis or the U.A.E. saying exactly what happened or identifying potential culprits. The U.S. deployed an aircraft carrier, bomber planes and defense missiles to the region last week amid worsening friction with Iran, Saudi Arabia’s regional rival.
“It’s all about uncertainty; whether it’s a founded or unfounded rumor, the market does not like it," said Scott Bauer, chief executive officer at Prosper Trading academy in Chicago, who said increasing volatility in the market was opening up new trading opportunities. “There is a thought process about ‘what else could happen next?’"
--With assistance from James Thornhill, Sharon Cho, Alex Longley, Caleb Mutua and Pratish Narayanan.
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