Oil prices witnessed a sharp decline due to further escalation of the trade war between the US and China.

Brent crude oil futures dropped 65 cents to $69.72 a barrel, while US West Texas Intermediate (WTI) crude futures slipped 69 cents to $61.43 per barrel, reported Reuters.

The trade war between the two largest economies show no signs of thaw with the US President Donald Trump raising the ante by alleging that China ‘broke the deal’ in trade negotiations. The US is set to impose stricter tariffs on Chinese imports later this week, if no agreement is reached.

Banking Group ING was quoted by Reuters as saying in a note: “The oil market has come under renewed pressure this morning, with the hope of a China/US trade agreement fading.”

“The oil market has come under renewed pressure this morning, with the hope of a China/US trade agreement fading.”

However, the market is expecting some positive outcome from Chinese Vice Premier Liu He’s two-day visit to Washington starting today to discuss and break the impasse.

Trade tensions have completely offset the concerns of tightening market due to Organization of the Petroleum Exporting Countries (OPEC)-led cuts and  US sanctions on Iran and Venezuela. On the other hand, the Energy Information Administration announced a four million drop in US crude inventories, which restricted oil prices from falling further.

ING added in the note: “Fundamentally the oil market remains constructive, with the global balance tightening, and still the potential for a number of supply-side risks.”

Barclays has increased its third-quarter price forecasts for the oil benchmarks Brent and WTI to $74 and $67 respectively, added Reuters.