Oil falls on US-China tensions

Oil prices fell in European trade on Monday, to resume losses after pausing on Friday, due to fears over the trade relation between the US and China, and OPEC-Plus easing its output cut starting August.

The US crude fell 0.8% to $40.92, after opening at $41.24 a barrel, and hit a session-high at $41.38, and Brent fell 0.9% to $42.96 a barrel, after opening at $43.36, with a high of $43.39 .

The US crude gained 0.5% on Friday, after dropping 2.1% on Thursday, and Brent crude futures fell 0.1%, after dropping 2.2%.

Global oil prices rose around 1.1% during the past week, thanks to upbeat economic data in Europe and the UK.

The Chinese government revoked the license of the US Consulate General in the southwestern city of Chengdu, and ordered the consulate to close, after the US ordered China to close its consulate in Houston, claiming its a spying center and used for US intellectual property theft.

This escalation of tensions between Washington and Beijing foreshadows a deterioration in trade relations between the two countries, which have improved after signing the Phase-One trade deal in January.

OPEC and independent allies, known as OPEC-Plus, agreed on the second phase of the global output cut agreement starting from August, as the global fuel demand relatively recovers from the coronavirus impact.

The decision means increasing output by 2 million barrels per day until the end of 2020, which could hurt the market balance, especially if the demand for fuel continued to weaken in some countries that are hit by the coronavirus outbreak.