Oil traded near $68 a barrel as investors assessed the impact of escalating trade frictions between the world’s two biggest economies against a decreasing number of American oil rigs and flaring tensions between the U.S. and Iran.

September futures in New York were little changed following a third straight weekly decline. The world’s top finance chiefs warned on Sunday that trade tensions threatened global growth as the engines of leading economies fall out of sync. The U.S. rig count fell by the most since March, while President Donald Trump launched a new broadside against Iran and warned of “consequences” if counterpart Hassan Rouhani again threatened America.

An evolving trade conflict between the U.S. and China has caused oil to retreat from the highs of June and spurred price volatility, which had risen last week to the highest level since February. The Chinese yuan climbed on Monday after a series of tweets by Trump undermined the outlook for the greenback, while the market has also been supported by persistent threats from America to curb exports from Iran.

What happens with the rising trade conflict between the U.S. and China is “going to be the dominant driver for commodities in shorter term.” Daniel Hynes, a senior strategist at Australia & New Zealand Banking Group Ltd., said by phone. “We’re seeing a little bit of volatility around investor positions and currency moves from the trade tensions.”

West Texas Intermediate crude for September delivery traded at $68.08 a barrel on the New York Mercantile Exchange, down 18 cents, at 2:39 p.m. in Singapore. The August contract, which expired Friday, closed 1.4 percent higher at $70.46 a barrel. Total volume traded was about 52 percent below the 100-day average.

Brent for September settlement lost 9 cents to $72.98 a barrel on the London-based ICE Futures Europe exchange. Prices fell 3 percent last week. The global benchmark crude traded at a $4.86 premium to WTI.

Futures fell 0.6 percent to 490.6 yuan on the Shanghai International Energy Exchange. The contract increased 0.5 percent last week.

Trade Frictions

As Trump prepares to slap tariffs on $500 billion of Chinese goods, trade dominated discussions over the weekend by finance ministers and central bankers from the Group of 20 nations. The main risks include increasing financial vulnerabilities, heightening trade and geopolitical tensions, as well as structurally weak growth, according to the statement published by G-20 after their two-day summit in Buenos Aires.

In the U.S., the number of working rigs dropped by five to 858 in the week ended July 20, the biggest decline in almost four months, Baker Hughes data showed. The decline in oil rigs came at a time when government data showed an unexpected build in crude inventories in the week ended July 13.

Meanwhile, Rouhani warned the U.S. that conflict with Iran would be the “mother of all wars,” and to stop pursuing hostile policies against the Persian Gulf state including threatening its oil exports. His U.S. counterpart Trump responded by saying “NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE,” in a Twitter post.

Other oil-market news:

  • OPEC is seen raising oil production by about 200,000 barrels a day through the fourth quarter of this year compared to the second quarter, even with disruptions to Iranian and Venezuelan output, Barclays Plc said in a note emailed July 23.
  • Hedge funds cut their net-long position—the difference between wagers on a price gain and bets on a drop—in Brent crude by the most since 2016.