Oil drops over 4% on rising China-US tensions, demand doubts

Oil fell over 4% on Friday to below $35 a barrel on rising U.S.-China tensions and doubts about the pace of demand recovery from the coronavirus crisis, although it remained on course for a weekly gain.

China is set to impose new national security legislation on Hong Kong, prompting a warning from U.S. President Donald Trump. Beijing also failed to set an economic growth target as the pandemic hammers the world’s second-largest economy.

Brent crude dropped $1.50, or 4.2%, to $34.56 a barrel at 1445 GMT, after falling as low as $33.54. U.S. West Texas Intermediate (WTI) crude declined by 98 cents, or 2.9%, to $32.94.

“Investors are once again having to contend with an intensifying war of words between the U.S. and China,” said Stephen Brennock of broker PVM.