Oil prices dipped in the early hours of Monday in response to the evolving cold war between the United States and China regarding the latter’s intention to exert security laws on Hong Kong and the prospect of incurring penalties from Washington.
Over the past couple of weeks, oil prices have maintained steady gains following the relaxation of coronavirus curbs stirring up demand but the rift between the world’s biggest oil consumer and China is gradually weakening investors’ confidence.
As of 02:52 West African Time, Brent had fallen by 19 cents or 0.5% to $34.94 per barrel.
U.S. West Texas Intermediate had similarly depressed about the same time, down by 6 cents or 0.2% to $33.19 a barrel.
Even though the two benchmarks have appreciated significantly in recent times, they are still down by 45% year to date.
Bonny Light, Nigeria’s flagship grade, weakened by $1.45 or 4.21% at the last session to close at $33.01 a barrel.
Reuters reported that Hong Kong cops fired tear gas and water canons to drive away protesters in their thousands, who were holding demonstrations against China’s plan to press national security laws on the city.
Stephen Innes, AxiCorp’s Chief Market Strategy said “the HK security legislation packs on a hefty amount (of) trade war risk premium,” adding that it heightened panic in the market in the week that just went by concerning the extent of Chinese policy stimulus.
Right from the outbreak of the coronavirus, relations between the U.S. and China has deteriorated. President Donald Trump and his Chinese counterpart, Xi Jinping have exchanged words over the pandemic among which are allegations of cover-ups and lack of openness.
Tensions between the two superpowers have involved Hong Kong, trade, human rights as well as U.S. backing for Chinese-claimed Taiwan.