Brent oil slid into bear-market territory, as the U.S.-China trade spat threatened to expand into a currency war and investors despaired about the damage to crude demand.

The rout for London-traded futures picked up speed as Tuesday’s session drew to a close, with Brent ending the day down 1.5% The global benchmark has now fallen more than 20% since a late-April peak, meeting the common definition of bear market.

Prices slumped despite a modest rally in equity markets after the People’s Bank of China moved to strengthen the yuan on Tuesday. The Trump administration had earlier declared the Asian nation a currency manipulator, opening the potential for even harsher impacts on global trade.

“We shouldn’t underestimate the potential impact of a full-blown trade war between the world’s two biggest economies,” said Bart Melek, head of global commodity strategy at TD Securities. “This could very well mean we as a market significantly overestimated demand growth for oil and we could easily be in a surplus situation in 2020.”

Brent crude prices are down more than 9% this month as global economic worries eclipse the rising threat of supply disruptions in the Middle East. Iran could step up its operations against tankers passing through the Strait of Hormuz, the world’s most important oil chokepoint, Foreign Minister Javad Zarif said on Monday.

Brent for October settlement fell 87 cents to settle at $58.94 a barrel on the London-based ICE Futures Europe Exchange.

West Texas Intermediate for September delivery lost $1.06, or 1.9%, to $53.63 a barrel on the New York Mercantile Exchange. WTI for October traded at a discount of $5.35 to Brent for that month, a gap that’s narrowed markedly in recent days as trade fears undercut the outlook for global oil prices.

While the U.S. Treasury Department’s labeling of China is largely symbolic, with only modest potential punishments compared with the steps President Donald Trump has already taken against the Asian nation, it underscores the rapidly deteriorating relationship between the two nations.

Beijing will likely retaliate with levies on American oil imports if the White House goes ahead with putting tariffs on all Chinese goods, Michal Meidan, director of the China Energy Programme at the Oxford Institute for Energy Studies, wrote in a note.

Citigroup Inc. warned that the conflict will persist long enough to dent any earnings rebound for corporate America.

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