Oil prices dropped by over 2% on Monday morning after U.S. president Donald Trump announced on Sunday that he would increase tariff rates applicable to all goods from China beginning this week.
In one tweet, the U.S president noted that 25% tariff would apply to all goods from China worth $200 billion beginning Friday, up from 10%. A further 25% would apply on goods worth $325 billion.
The tweets threatened U.S.-China trade talks and were responsible for a market downturn, with global stock markets hit hard. Also affected have been oil prices and crude oil futures.
On Monday, West Texas Intermediate (WTI) crude futures closed at $60.44 for one barrel at 0032 GMT. This was a 2.4% drop which is equivalent to $1.50 a barrel compared to their previous settlement.
Brent crude oil futures went down by $1.51 a barrel closing at $69.34, accounting for a drop of 2.1%.
In February, oil production in the U.S. fell considerably to see only 200,000 barrels produced per day. But production improved in subsequent months, as data released by the Energy Information Administration revealed a week ago.
Figures also showed that the oil industry is likely to see the increased output from within the United States, with the world’s leading economy already seeing a surge in crude oil production. From early 2018, the sector has seen production increase by over 2 million barrels a day.
The levels have brought the barrels per day (bpd) estimates since then to an all-time high of 12.3 million bpd. With that, the United States has surged ahead of competitors Russia and Saudi Arabia as the world’s biggest crude oil producer.
According to oil services company Baker Hughes, oil drilling has surged while the number of rigs for gas drilling reduced dramatically. The firm recently released data that shows the number of rigs in the gas drilling industry in the U.S. dropped by 3 to 183.
Over the same period, the week leading to May 3, the number of rigs dedicated to drilling oil increased by 2 to 807.