Contracts for delivery of Mark Brent oil at the auction on October 10 fell by almost 4% - to $62.5 per barrel. Quotes of American oil West Texas Intermediate (WTI) also went down by more than 4% to $58.7 per barrel, which was their lowest since Ma. Both Marks approached one of the lowest price levels since the beginning of the pandemic, notes The Wall Street Journal.

Oil prices accelerated their fall after the US threatened to impose new duties against China. On Friday, in response to Beijing's decision to tighten export controls on rare earth metals, Donald Trump threatened a "massive increase in duties" on Chinese goods. The statements revived fears that a trade war between the world's two largest economies would reduce demand for oil and dampen interest in risky assets, Bloomberg reports.

"If Trump implements these threats, there will be negative economic consequences and a drop in demand for oil and petroleum products," said John Kilduff, partner at Again Capital.

In recent months, oil prices have fallen despite strong demand - primarily due to increased production by OPEC countries led by Saudi Arabia, as well as record oil production in the U.S., writes WSJ. Additional pressure on the market came from the news that Israel approved an agreement involving a ceasefire in Gaza and the exchange of Hamas-held Israeli hostages for prisoners, Bloomberg adds. This move effectively removed from oil prices a "geopolitical risk premium" as it brings closer a possible end to the conflict that has destabilized the region, which accounts for about a third of global oil production.

"The oil market is facing three blows at once: new trade threats [by the U.S. to China] have worsened the demand outlook, a sell-off in risk assets is deterring buyers from entering the market, and automated trading strategies are adding pressure to prices by building up short positions," said Rebecca Babin, senior energy trader at CIBC Private Wealth Group. - Unless there is a clear reason for new buying, the market could slip sharply before stabilizing back up" (quoted by Bloomberg).

This article was AI-translated and verified by a human editor

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