The stock and the commodities market slipped lower on Wednesday as trade tensions between U.S. and China continued to escalate.

On Wednesday, following renewed threats of tariffs on Chinese goods worth $200 billion by U.S. President Donald Trump, commodities and stock markets dipped lower due to an increase in trade tensions between two of the world’s biggest economies.

By 0308 GMT, Brent crude futures LCOc1 were down by 1%, or 75 cents and were seen trading at $78.11 a barrel.

“The trade concerns have bitten today and the reason is that this is above and beyond what the market was expecting,” said Michael McCarthy, chief markets strategist at CMC Markets, Sydney.

The downturn in market sentiments was also fueled by the news that Washington is weighing its options vis-a-vis waivers from sanctions that are to snap back in place on Iranian crude oil exports.

On Tuesday, U.S. Secretary of State Mike Pompeo stated, the U.S. would consider requests from some countries to be exempted from Iran-related sanctions that will come into effect from November 1.

This is in contrast to Washington’s earlier position that countries, with no exceptions, will have to stop all imports of Iranian oil from Nov. 4 or face U.S. financial measures.

Earlier this year in May, Trump pulled the United States out of the 2015 landmark Iran nuclear agreement.

Data from the American Petroleum Institute shows, U.S. crude inventories had fallen by 6.8 million barrels, last week.

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