Oil extends losses, trades at four-year lows as US-China trade war escalates

Oil prices fell more than $1 a barrel on Tuesday, trading at four-year lows, as recession fears exacerbated by the trade conflict between the U.S. and China, the world's two biggest economies, offset a stock market rebound.

Brent futures were down $1.47, or 2.29%, at $62.74 a barrel at 1:13 p.m. EDT (1713 GMT). U.S. West Texas Intermediate crude futures fell $1.26, or 2.08%, to $59.44.

The U.S. will impose a 104% tariff on China from 12:01 a.m. EDT on Wednesday, a White House official said after Beijing did not lift its retaliatory tariffs on U.S. goods by a noon deadline on Tuesday set by Trump.

Both benchmarks fell more than $1 a barrel.

On Tuesday, Beijing vowed not to bow to what it called U.S. "blackmail" after Trump threatened an additional 50% tariff on Chinese goods if the country did not lift its 34% retaliatory tariff.

China's Commerce Ministry said the country "will fight to the end," ratcheting up fears about a contraction of the global economy.

"The scenario has presented a case for a global recession, where fears of energy demand declining have emerged," Alex Hodes, director of market strategy at financial services firm StoneX, said in a note.

U.S. Trade Representative Jamieson Greer told U.S. senators on Tuesday that China has not indicated that it wants to work toward trade reciprocity.

Goldman Sachs forecast that Brent and WTI crude prices would be at $62 and $58 a barrel, respectively, by December 2025, and at $55 and $51, respectively, a year after that, under different scenarios.

The U.S. administration has indicated a strong preference for reducing crude prices to $50 or lower, considering this goal a top priority among its objectives, according to Natasha Kaneva, head of global commodities strategy at J.P. Morgan.

"This includes being willing to endure a period of industry disruption similar to the one experienced by the shale sector during the 2014 price war between OPEC and shale, if it ultimately results in lower cost of oil production," Kaneva said.