Oil. Picture: REUTERS
Oil. Picture: REUTERS

Tokyo — Oil prices fell on Wednesday, with Brent dropping by more than $1 at one point, after US President Donald Trump threatened to levy new trade tariffs on China.

The spectre of tariffs on a further $200bn worth of Chinese goods sent commodities lower along with stock markets, with trade tensions between the world’s two biggest economies intensifying.

Brent crude futures were down 75c, or 1%, at $78.11 a barrel by 3.08am GMT, having fallen as low as $77.60. US crude was down 55c, or 0.7%, at $73.56.

"The trade concerns have bitten today and the reason is that this is above and beyond what the market was expecting," said Michael McCarthy, chief markets strategist at CMC Markets in Sydney.

The bearish mood was also fuelled by news the US would consider requests for waivers from sanctions due to snap back into place on Iranian crude exports.

Washington would consider requests from some countries to be exempted from sanctions it would put into effect in November to prevent Iran from exporting oil, US Secretary of State Mike Pompeo said on Tuesday.

Washington had earlier told countries they must halt all imports of Iranian oil from November 4 or face US financial measures, with no exemptions.

The US pulled out of a multinational deal in May to lift sanctions against Iran in return for curbs to its nuclear programme.

US crude inventories fell last week by 6.8-million barrels, according to data from industry group, the American Petroleum Institute (API).

Analysts polled by Reuters forecast that crude stocks fell on average by 4.5-million barrels, ahead of government data at 2.30pm GMT on Wednesday.