The major equity indexes were down more than 1 percent on Thursday as the European Commission issued a warning regarding Italy’s budget and concerns mounted over the possibility of strained relations between the United States and Saudi Arabia, denting investors’ appetite for risk.

The major equity indexes saw the greatest decline since last week’s rout as investors agonized over the U.S.-China trade war’s impact on economic growth, the Italian debt crisis and rising interest rates.

High-flying technology shares again led the sell-off, while defensive sectors like utilities and real estate fared better. Mixed earnings, with disappointments from key industrial and tech names, added to investor anxiety.

The S&P 500 slid back toward its 200-day moving average, the Dow Jones Industrial Average shed more than 300 points and the Nasdaq 100’s rout topped 2 percent.

The weakness comes after China sank overnight, bringing losses in its major benchmark to 30 percent since January highs.

Earnings remain in focus though the depth of the sell-off overshadowed most major reports. Misses by several industrial firms and a Bank of America downgrade of the housing sector fueled worries that higher interest rates and the trade war are hitting profits.

Crude Prices Fall

Talk of oil prices spiking to $100 has been replaced by another discussion: How low can crude futures go?

The oil market has undergone a spectacular reversal, even against a backdrop of looming sanctions on Iran, OPEC’s third-largest crude producer, and rising tensions between Washington and Saudi Arabia, the world’s largest oil exporter.

U.S. crude futures fell to a nearly five-week low of $68.47 on Thursday, plunging more than $8 a barrel from this month’s four-year high at $76.90. That is a 11 percent decline from peak to trough over just two weeks.

Meanwhile, Brent crude bottomed out at $78.69 a barrel on Thursday, down $8, or 9.3 percent, from its four-year high at $86.74 on Oct. 3.

There are three reasons why:

The supply of oil held in U.S. storage tanks has risen sharply over the last four weeks with crude stockpiles are up by 22.3 million barrels through last week. That’s the largest increase over that four-week period since 2015, when storage levels were rising toward all-time highs in a heavily oversupplied market.

Brent crude’s increase above $86 a barrel two weeks ago sparked fears that the high cost of oil would start to erode demand for the commodity. In recent weeks, OPEC and the International Energy Agency lowered their forecasts for growth in oil demand considering a weaker outlook for global economic gains.

Saudi Arabia could face sanctions over the incident, and on Thursday Treasury Secretary Steven Mnuchin announced he is pulling out of a high-profile Saudi investment conference.

At the same time, Trump is depending on Saudi Arabia to hike its oil output to offset his Iran policy’s inflationary pressure on oil prices. The kingdom is one of the few nations with enough spare capacity to tame the cost of crude.

And while there have been veiled threats from Saudi Arabia, the market is deeply skeptical that Riyadh would cut output and push oil prices higher to settle a political score. Saudi Arabia issued a forceful statement threatening retaliation against sanctions over the weekend, it has since “more than backed away” from that posturing.

Except for Canada, no country sends more oil to the United States than Saudi Arabia, Smith noted, and Saudi oil giant Aramco owns the largest refinery on the U.S. Gulf Coast. Further, U.S. lawmakers could design sanctions so that they do not impact energy flows, he said.