Oil prices fell by over 2% in early U.S. trade on Tuesday due to concerns about the U.S.-China trade war impacting the global economy. WTI Crude dropped to $58.12 per barrel, while Brent Crude was at $61.94. Hopes of a diplomatic breakthrough were overshadowed by China sanctioning U.S. subsidiaries, escalating trade tensions.

China’s sanctions on U.S. subsidiaries of South Korean shipbuilder Hanwha Ocean led to a ban on Chinese entities doing business with the sanctioned U.S. companies. The move followed China’s enhanced export controls on rare earths and rare earth processing technology, adding to global economic concerns and oil demand worries.

Despite plans for a Trump-Xi meeting in South Korea, renewed trade tensions have raised fears about the global economy and oil demand, with an expected record glut in oil markets. Ole Hansen of Saxo Bank noted that only a possible escalation involving Russia could prevent further oil price declines towards key support levels.

The oil market continues to experience fluctuations due to the ongoing U.S.-China trade war, with impacts on corporate results and global economy. Concerns over an AI bubble and risk aversion are leading to oil price declines, with support levels in Brent below $60 at risk.

Read more at Yahoo Finance: Oil Prices Plunge on U.S.-China Trade War Tit-for-Tat