Oil Prices Plunge on U.S.-China Trade War Tit-for-Tat

Core Viewpoint - Oil prices have declined by more than 2% due to renewed concerns over the U.S.-China trade war potentially slowing the global economy [1][5]. Oil Prices - WTI Crude fell to $58.12 per barrel, down by 2.30% [1]. - Brent Crude was trading at $61.94, down by 2.181% [2]. Market Sentiment - Initial stabilization in oil prices was observed due to hopes for improved diplomatic relations between the U.S. and China, but trade tensions resurfaced after China sanctioned five U.S. subsidiaries of Hanwha Ocean [3][4]. - The sanctions prohibit Chinese entities from conducting business with the affected U.S. companies, effective immediately [4]. Trade Relations - The recent trade escalation follows China's imposition of enhanced export controls on rare earths and related technologies [5]. - Despite President Trump's intention to meet with President Xi Jinping, renewed tensions have raised concerns about global economic impacts and oil demand [5]. Market Analysis - The decline in crude oil prices is attributed to fading risk appetite and renewed selling in U.S. equities, driven by concerns over the trade war's effects on corporate results and fears of an AI bubble [6]. - Analysts suggest that only an escalation involving Russia could prevent further price declines, particularly for Brent Crude below $60 [6].