Oil fell for the first time in three days as U.S. Secretary of State Mike Pompeo fanned the flames of the trade war with China, heightening concerns about economic growth that underpins energy demand.

Futures fell as much as 1.7% in New York on Tuesday. Pompeo told CNBC that Huawei Technologies Co. and other Chinese companies pose national security threats to the U.S. Still, Pompeo said he expects talks with China to continue. More than 80% of the stocks in the S&P 500 Index declined and U.S. government debt rose as investors shunned risky assets.

“The weakening global economic backdrop continues to control the narrative across equities and other asset classes and the oil market is certainly not being spared,” said Michael Tran, commodity strategist at RBC Capital Markets.

Crude prices have been whipsawed this month amid conflicting indicators of whether the trade war will move toward resolution. Germany is preparing fiscal stimulus measures to head off the chances of a deep recession in Europe’s biggest economy, while more Federal Reserve rate cuts are expected to shore up American growth.

Analysts are forecasting that U.S. crude stockpiles last week fell for the first time in three weeks, a positive sign for oil markets.

West Texas Intermediate crude for September delivery slipped 90 cents to $55.31 a barrel at 9:48 a.m. on the New York Mercantile Exchange. The contract expires Tuesday. The more active October contract fell 79 cents to $55.35.

Brent for October settlement declined 72 cents to $59.02 on the ICE Futures Europe Exchange. The global benchmark crude traded at a premium of $3.67 a barrel to WTI.

Huawei Move

While the White House’s move Monday to delay sanctions on Huawei was seen as encouraging for the prospects of a trade deal between the world’s two largest economies, the U.S. added more than 40 affiliates of the Chinese company to a trade blacklist. Huawei said in a statement the reprieve doesn’t change the fact that it has been “treated unjustly.”

“The outcome of the next U.S.-China trade meeting will be the true litmus test for oil markets,” said Stephen Innes, managing partner at VM Markets Pte. in Singapore. “Oil traders don’t want to race too far ahead of the economic realities of the trade war narrative, so a bit of profit-taking is in order.”

The Federal Reserve will hold its annual symposium in Wyoming later in the week, where Chairman Jerome Powell’s remarks will be closely watched.

American crude stockpiles probably fell by 1.5 million barrels last week, according to the median estimate in a Bloomberg survey. The official data from the Energy Information Administration is scheduled to be released on Wednesday. The industry-funded American Petroleum Institute discloses its own tally later Tuesday.