Oil prices fall due to Trump’s trade wars
10 March 2025 08:53
On Monday, oil prices fell amid concerns about the impact of U.S. import tariffs on global economic growth and fuel demand, as well as increased oil production by OPEC countries. These factors have led to a decrease in investor appetite for risky assets, "Komersant Ukrainian" reports with reference to Reuters.
As of 06:45 Kyiv time, the price of Brent crude oil fell by 31 cents (0.4%) to $70.05 per barrel after rising by 90 cents on Friday. U.S. West Texas Intermediate (WTI) was trading at $66.69 per barrel, down 35 cents (0.5%), after rising 68 cents in the previous trading session.
Uncertainty over tariffs weighs on the market
WTI is down for the seventh week in a row, the longest streak of declines since November 2023, while Brent is down for the third week in a row. This comes after US President Donald Trump imposed, then stopped, and then re-launched tariffs on key oil suppliers Canada and Mexico, while raising taxes on Chinese goods. China retaliated by imposing tariffs on American and Canadian agricultural products.
“Uncertainty over tariffs is a key factor in the weakness,”
– ING analysts said in their report, adding that lower oil prices from Saudi Arabia and deflationary signals from China also had a negative impact on market sentiment.
Other market factors
IG analyst Tony Sycamore noted that other factors that put pressure on oil prices are
- concerns about the growth of the US economy;
- potential lifting of US sanctions against Russia;
- oPEC’s decision to increase production.
On Friday, oil prices partially recovered after Trump’s statement that the United States would tighten sanctions against Russia if the latter does not reach a ceasefire with Ukraine. However, the United States is also exploring ways to ease sanctions against Russia’s energy sector if it agrees to end its war with Ukraine.
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Mood in OPEC
Meanwhile, the Organization of the Petroleum Exporting Countries and its allies, including Russia, collectively known as OPEC, have announced that they will continue to increase oil production from April.
On Friday, Russian Deputy Prime Minister Alexander Novak said that OPEC could reverse this decision in case of an imbalance in the market.
Additional concerns about supply were raised by Saudi Arabia’s decision to cut prices for the grades of oil it sells to Asia for the first time in three months in April.
Trump vs. Iran
Last week, Trump said he wants to negotiate with OPEC member Iran to prevent the latter from seeking nuclear weapons, although Iran claims it does not seek such weapons.
Trump is conducting a “maximum pressure” campaign against Iran, as part of which the US on Saturday canceled an exception that allowed Iraq to pay Iran for electricity, a State Department spokesman said.
Iran’s Supreme Leader Ayatollah Ali Khamenei said on Saturday that his country would not be forced to negotiate.
Forecast
Tony Sycamore of IG believes that the market has now taken into account all the factors contributing to the decline in prices, so they should stabilize this week and then move up.
“Nevertheless, as most of the negative news is likely to have been taken into account, we expect the weekly support around $65/$62 to remain firm before recovering to $72.00,” he said in a note to clients,
– he said in a note to clients on the WTI price.
Trump’s trade wars
Donald Trump’s administration has imposed trade restrictions on China, Mexico, and Canada, the three largest trading partners of the United States. The US government imposed an import duty of 25% of the value of goods from Canada and Mexico, and 20% on goods from China. An additional duty is imposed on Canadian energy products.
These measures have caused concern among U.S. companies that depend on metals imports from Canada and Mexico. They are expected to look for alternative sources of supply, in particular in the Middle East, India, Chile, and Peru, which could lead to higher prices for aluminum and copper in the United States.
In addition, Canadian consumers have responded to the imposition of duties by boycotting American goods, canceling trips to the United States and refusing to buy American alcohol.
Economists warn that such trade disputes could slow global economic growth and cause inflation. Stock markets in the Gulf countries earlier reacted with a decline due to fears of a possible trade conflict. The cryptocurrency market also collapsed earlier.
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