Futures in New York dropped as much as 1.8%, on course for the lowest close since April 9, after a 2.7% decline Friday. Iran says Venezuela and Iraq will join it in blocking a proposal to increase production that’s backed by Saudi Arabia and Russia when OPEC and its allies meet in Vienna this week. China said it would impose tariffs on a variety of US goods, including crude and gasoline, in response to President Donald Trump’s USD50 billion levy on Chinese imports.

Crude has dropped more than 10% from late May amid signs Saudi Arabia and Russia are seeking to lift output curbs that have eliminated a global surplus and boosted prices. Meanwhile, traders are trying to digest the impact from both the US and China issuing tariffs on goods and the threat of a broader trade war between the world’s two largest economies.

“Oil is down in a knee-jerk reaction to possibilities of a trade war intensifying between the US and China, and OPEC’s production increase easing the demand and supply balance,’ Takayuki Nogami, chief economist at state-backed Japan Oil, Gas & Metals National Corp., said by phone from Tokyo. “If the US and China continue to retaliate and Saudi Arabia and Russia keep signalling a production increase, that will further weigh on prices.”

West Texas Intermediate crude for July delivery fell as much as USD1.15 to USD63.91 a barrel on the New York Mercantile Exchange and traded at USD63.93 at 10.55 am in Tokyo. The contract declined USD1.83 to USD65.06 on Friday. Total volume traded was about 11% below the 100-day average.

Brent futures for August settlement lost as much as 44 cents to USD73 a barrel on the London-based ICE Futures Europe exchange. The contract dropped USD2.50 to USD73.44 on Friday. The global benchmark crude traded at a USD8.96 premium to WTI for the same month.

Trading on the Shanghai International Energy Exchange is closed for a Chinese public holiday. The contract fell 0.2% on Friday.