Oil prices continue to fall on the back of Trump’s tariff policy
11 March 2025 09:46
Oil prices recovered somewhat on Tuesday after a morning decline, but the overall decline continues. The factors behind this are fears of a possible recession in the US, the consequences of US tariff policy for the global economy and OPEC’s decision to increase production. This was reported by "Komersant Ukrainian" with reference to Reuters.
As of 08:40 Kyiv time, Brent crude oil futures rose by 18 cents, or 0.3%, to $69.46 per barrel after falling in the morning. Futures for US West Texas Intermediate (WTI) rose 9 cents, or 0.1%, to $66.12 per barrel after the previous decline.
However, these prices are lower than they were yesterday morning. WTI has been declining for the seventh week in a row, the longest streak of decline since November 2023, while Brent has been falling for the third week in a row.
Influencing factors: technical support and OPEC’s position
Despite the market volatility, the level of about $70 per barrel for Brent remains quite strong support, said Suvro Sarkar, head of energy analytics at DBS Bank. He added that OPEC’s response to the oil supply situation will remain flexible in line with market conditions.
“If oil prices fall below $70 per barrel for a prolonged period, production increases are likely to be suspended. OPEC will also closely monitor Trump’s policy towards Iran and Venezuela,”
– the analyst emphasized.
Sarkar also noted that the United States has already canceled Chevron’s license to operate in Venezuela, and it is not yet known whether sanctions against Iran will be strengthened. At the same time, concerns about global economic growth amid policy uncertainty and trade wars remain the main factors that will affect the market in the near future.
Market reaction to trade wars
US President Donald Trump ‘s protectionist policies continue to destabilize global markets. Earlier, he imposed duties on the largest oil suppliers to the United States – Canada and Mexico, then postponed their introduction, but a month later he did introduce them. At the same time, Washington raised tariffs on Chinese goods, to which China and Canada responded with mirror measures.
Over the weekend, Trump said that the US economy could be in a “transition period,” but refused to predict whether the country was facing a recession.
Against the backdrop of his statements, investors began to include in their forecasts the risks of a slowdown in oil demand growth, which provoked a wave of asset sales, said Daniel Hynes, senior commodity strategist at ANZ.
Читайте нас у Telegram: головні новини коротко
Stock markets are under pressure
US stock indices, which often set the tone for oil quotes, suffered significant losses on Monday. The S&P 500 index lost the most since December 18, and the Nasdaq fell by 4.0%, its worst one-day performance since September 2022.
Meanwhile, US Secretary of Commerce Howard Latnick said on Sunday that Trump does not intend to ease pressure on tariffs on Mexico, Canada and China.
OPEC plans and US oil reserves
On the oil supply side, Russian Deputy Prime Minister Alexander Novak said last Friday that OPEC countries had agreed to start increasing production in April. However, the decision may be revised if the market reveals imbalances.
In the United States, according to preliminary estimates from a Reuters poll, crude oil stocks increased last week, while distillate and gasoline stocks likely declined.
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 a 20% duty 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 metal 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 reacted 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.
Читайте нас у Telegram: головні новини коротко
