Oil falls as U.S.-China tension escalates

Oil fell on Monday on worries about renewed tensions between the United States and China, although reports that OPEC and Russia were closer to a deal on extending oil output cuts lent some support to prices.

Benchmark Brent crude was down 46 cents, or 1.2%, at $37.38 a barrel at 1331 GMT. U.S. crude fell $1.04, or 2.9%, to $34.45 a barrel. Investors turned cautious after China warned of retaliation on U.S. moves over Hong Kong.

Beijing has asked its state-owned firms to halt purchases of soybeans and pork from the United States, two sources said. China could expand the order to include additional U.S. farm goods if Washington took further action, sources said.

Manufacturing data has also showed that Asian and European factories were struggling as lockdowns due to the coronavirus pandemic kept demand in check. Prices found some support, however, after a news that the Organization of the Petroleum Exporting Countries and Russia, part of a group known as OPEC+, were moving closer to a compromise on the duration for extending oil output cuts and were discussing rolling over the curbs one to two months.

Algeria, which holds the rotating OPEC presidency, has proposed that OPEC+ hold a meeting on June 4 rather than the previously planned June 9-10. Russia has said it has no objection to meeting sooner.

Oil falls as U.S.-China tension escalates, Reuters, Jun 1