Oil prices plunged more than 7% on Thursday to a seven-week low after President Trump said he would impose a 10% tariff on $300 billion worth of Chinese imports from September 1.
The protracted trade war between the world's two largest economies has raised concerns about oil demand.
Brent crude oil futures plunged $4.55, or 6.99%, to close at $60.50 a barrel, once falling to $60.02, the lowest level since June 13. Thursday saw the biggest one-day percentage decline since February 2016.
U.S. crude oil futures plunged $4.63, or 7.9%, to close at $53.95 a barrel, after falling to the lowest level since June 19 at $53.59. Thursday recorded the largest percentage decline since February 2015.
"Oil prices have fallen sharply today, hit by the disappointing easing efforts of the Federal Reserve and the announcement by President Trump of tariffs on Chinese imports," said John Kilduff, partner in Again Capital Management.
"The U.S. -China trade war has seriously damaged the prospects for energy demand, which only exacerbates these concerns," he said. "The trade war is clearly far from over."
Oil prices fell earlier and continued to respond to the Federal Reserve's policy decision on Wednesday. The Federal Reserve cut rates as expected, but Fed Chairman Powell said the rate cut may not be the beginning of a series of rate cuts to help the economy withstand the risk of global economic weakness, which reversed market sentiment.
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