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On Wednesday, reports suggested that China was considering restricting its exports of rare earth minerals to the U.S. as the situation intensifies. China is the largest exporter of rare earth minerals, which include 17 elements used in a number of sectors – including technology and energy.
“Oil prices are crashing on the prospect of a longer than expected trade war,” Patrick DeHaan, a senior petroleum analyst at GasBuddy.com, told FOX Business. “As long as this tit-for-tat escalation continues, expect oil prices to be under selling pressure.”
The threat to cut off rare earth minerals added to selling pressure on Wednesday, DeHaan noted.
Brent crude fell more than 1 percent, to about $67.87 per barrel on Wednesday, while West Texas Intermediate (WTI) crude dropped about 0.5 percent, to $58.83 per barrel. Both are on track for monthly declines.
Trade tensions are likely to worsen as President Trump has threatened to impose additional tariffs on $300 billion worth of goods from China. Earlier this month, he raised the tariff rate on $200 billion worth of Chinese goods to 25 percent, from 10 percent. Beijing then raised tariffs in retaliation. The U.S., citing national security concerns, is also limiting its purchases of products from Chinese technology firm Huawei.
Meanwhile, concerns about oversupply in the oil market are mounting as U.S. stockpiles are increasing. The Organization for Petroleum Exporting Countries (OPEC) will meet next month, where members will revisit the issue of production cuts by member countries.