LONDON (Reuters) – Oil prices rose more than 2% on Friday, regaining some ground after their biggest falls in years on U.S. President Donald Trump’s threat to impose more tariffs on Chinese imports.
FILE PHOTO: A view shows Saudi Aramco’s Abqaiq oil facility in eastern Saudi Arabia in this undated handout photo. Saudi Aramco/Handout via REUTERS
The move, due to take effect on Sept. 1, intensifies a trade war between the world’s top two economies and oil consumers that has disrupted global supply chains and roiled financial markets. Any resulting economic slowdown could dent oil demand.
Benchmark Brent LCOc1 rose $1.56, or 2.6%, to $62.06 a barrel by 1210 GMT on Friday, after slumping more than 7% on Thursday, their steepest drop in more than three years.
U.S. crude gained $1.29, or 2.4%, to $55.24 on Friday, after tumbling nearly 8% the previous day when they posted their biggest drop in more than four years.
Thursday’s slide ended a fragile rally built on steady drawdowns in U.S. inventories, even though global demand looked shaky due to the trade dispute.
“Given the latest turn in U.S.-Sino trade relations, sustaining this uplift may be subject to how China chooses to respond to President Trump’s new tariff initiative”, said Harry Tchilinguirian, global oil strategist at BNP Paribas in London.
“The rise in oil prices may be simply the result of a technical bounce back from an oversold close,” he told the Reuters Global Oil Forum, referring to Thursday’s tumble.
Trump said on Thursday he would impose a 10% tariff on $300 billion of Chinese imports and could raise tariffs further if China’s President Xi Jinping failed to move more quickly to strike a trade deal.
The announcement extends Trump’s tariffs to nearly all of China’s imports into the United States.
China said it would not accept any “intimidation or blackmail” and pledged countermeasures should the tariffs go into effect.
The U.S. economy expanded by 2.1% in the second quarter, government data showed on July 26, beating economists’ expectations although it was lower than first quarter growth.
Still, there are signs of the economic toll of the trade dispute between the United States and China, which this week reported slowing manufacturing activity in July.
U.S. manufacturing activity also slipped last month, dropping to a near three-year low, and construction spending fell in June as investment in private construction projects tumbled to its lowest level in 1-1/2 years, data showed.
(GRAPHIC – Daily closes for Brent, U.S. crude in 2019 png: tmsnrt.rs/2yHHep7)
Additional reporting by Aaron Sheldrick; Editing by David Evans and Edmund Blair