Oil prices plunged as much as 7 per cent on Wednesday, hitting fresh four-year lows before recovering some ground, after China announced additional tariffs on US goods in retaliation against President Donald Trump's tariff policy, reports Reuters.
China will impose 84 per cent tariffs on US goods from Thursday, up from the previously announced 34 per cent, the finance ministry said.
Brent futures were down $2.47, or 3.9 per cent, to $60.35 a barrel at 1423 GMT. US West Texas Intermediate crude futures were down $2.35, or 3.9 per cent, at $57.23.
Both contracts lost about 7 per cent before paring losses.
Trump's 104 per cent tariffs on China kicked in from 12:01 a.m. EDT (0401 GMT) on Wednesday, ratcheting up duties after Beijing failed to lift its initial retaliatory tariffs on US goods.
The escalating trade war between China and the US is stoking fears of a global recession, said UBS analyst Giovanni Staunovo. "While oil demand has likely not suffered yet, rising concerns of weaker oil demand over the coming months require lower prices to trigger supply adjustments to prevent an oversupplied market," Staunovo added.
European Union countries, meanwhile, are expected to approve the bloc's first countermeasures against Trump's tariffs on Wednesday, adding to China's and Canada's retaliatory measures.
"China's aggressive retaliation diminishes the chances of a quick deal between the world's two biggest economies, triggering mounting fears of economic recession across the globe," said Ye Lin, vice president of oil commodity markets at Rystad Energy.
