LONDON: Oil prices fell by 2% on Tuesday, weighed down by rising OPEC and Russian oil output as well as the protracted U.S.-China trade dispute that has dragged on the global economy.
U.S. crude was down $1.26, or 2.3%, at $53.84 a barrel by 1152 GMT and Brent crude was down 96 cents at $57.70.
The United States this week imposed 15% tariffs on a variety of Chinese goods and China began to impose new duties on a $75 billion target list in a trade war that has rumbled on for more than a year.
Though the trade conflict has intensified, U.S. President Donald Trump said both sides would meet for talks this month.
Meanwhile, South Korea’s economy turned out to have expanded less than expected in the second quarter, with exports revised down in the face of the prolonged U.S.-China dispute, central bank data showed on Tuesday.
A move on Sunday by Argentina to impose capital controls also cast a spotlight on emerging market risks.
“Oil will struggle to make substantial headway topside this week with no progress on trade talks or meetings even, soft data from Asia and a possible cracking of OPEC’s resolve to control production,” said Jeffrey Halley, senior market analyst at OANDA.
Output from the Organization of the Petroleum Exporting Countries (OPEC) rose in August for the first month this year as higher supply from Iraq and Nigeria outweighed restraint by Saudi Arabia and losses caused by U.S. sanctions on Iran.
Russian oil production in August rose to 11.294 million barrels per day (bpd), topping the rate cap pledged by Moscow in a pact with other producers and hitting its highest since March, data showed on Monday.
Data due this week on U.S. inventory levels will be delayed by a day to Wednesday and Thursday because of the U.S. Labor Day holiday on Monday.
“What’s bad for the outlook for global growth is bad for oil at the moment and only big draws in inventories can delay that drift lower,” said Greg McKenna, strategist at McKenna Macro.