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Global oil benchmark Brent futures fell more than 3 per cent on Monday on global growth concerns after U.S. President Donald Trump last week threatened China with more tariffs, which could limit crude demand from the world’s two biggest buyers.

Brent crude fell US$2.08, or 3.36 per cent, to settle at US$59.81 a barrel.

U.S. West Texas Intermediate (WTI) crude futures fell 97 US cents, or 1.74 per cent, to settle at US$54.69 a barrel, finding some support from a draw in inventories at the Cushing, Okla., storage hub and delivery hub for WTI.

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Stocks at Cushing fell nearly 2.4 million barrels in the week to Aug. 2, traders said, citing data from market intelligence firm Genscape. WTI’s discount to Brent narrowed to US$5.15 a barrel, its narrowest since July, 2018.

Both crude benchmarks plummeted by more than 7 per cent last Thursday to their lowest level in about seven weeks after Mr. Trump’s announcement, before recovering somewhat to leave Brent down 2.5 per cent on the week and U.S. crude 1 per cent lower.

Trade war worries hit global equities again on Monday, while stoking a rally in safe-haven assets including the Japanese yen, core government bonds and gold.

“While latest trade headlines will be forcing downward adjustment in global oil demand expectations for this year and possibly next, it is looking quite likely that Asia will bear the brunt of the expected slowing in oil demand growth,” Jim Ritterbusch of Ritterbusch and Associates said in a note.

Mr. Trump last week said he would impose a 10-per-cent tariff on US$300-billion of Chinese imports starting on Sept. 1 and said he could raise duties further if Chinese President Xi Jinping failed to move more quickly toward a trade deal.

The announcement extends U.S. tariffs to nearly all imported Chinese products. China on Friday vowed to fight back against Mr. Trump’s decision, a move that ended a month-long trade truce.

On Monday, China let the yuan tumble beyond the seven-per-U.S. dollar level for the first time in more than a decade.

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A lower yuan raises the cost of dollar-denominated oil imports in China, the world’s biggest crude oil importer.

Signs of rising oil exports from the United States also put pressure on prices on Monday. U.S. shipments surged by 260,000 barrels a day (b/d) in June to a monthly record of 3.16 million b/d, U.S. Census Bureau data showed on Friday.

Lending some support to prices, Iran’s seizure of an Iraqi oil tanker raised concerns about potential Middle East supply disruptions in the Gulf.

Iran will no longer tolerate “maritime offences” in the Strait of Hormuz, its Foreign Minister said on Monday.

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