Crude rebounds after big drop following Trump’s threat to raise tariffs on Chinese goods

Oil prices regained ground on Friday with an average 2% rise after their biggest fall in over three years. It followed US President Donald Trump’s threat of another tariff hike on Chinese imports.

Brent futures gained $1.50, or 2.5%, rising to $62 a barrel by Friday morning, while US West Texas Intermediate (WTI) futures rose $1.07, or 2%, to $55.02 a barrel.

“Crude has consolidated with a hefty rebound in early trading today, however volatility will likely remain high as the market gets a feel for potential Chinese retaliatory measures in the coming days,” consultancy JBC Energy said, as cited by Reuters.

The consultancy noted, however, that the situation is unstable and is hard to predict as “the chances of a swift US-Chinese rapprochement [are] diminishing.”

Both Brent and WTI dropped more than 7% on Thursday, plunging to their lowest in over three years. This was the oil market’s reaction to Trump’s vow to slap a 10 percent tariff on $300 billion of Chinese imports, as well as his warning of a potential further increase if China fails to strike a trade deal with Washington in the near future.

Trump recently warned that China will get “a much tougher” agreement if Beijing keeps stalling the talks until the 2020 presidential election in the US. He blasted Beijing for failing to make good on its promise to buy “large quantities” of American agricultural products, a claim which China denies.

Trump’s move extends the tariffs to nearly all of China’s imports into the US. It is due to take effect on September 1 and, experts say, could further intensify the long-running rift between the world’s two leading economies and crude consumers as it has already dented global supply chains and put financial markets on edge.

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