Oil prices came under pressure following US President Trump’s tariff announcements, according to Carsten Fritsch, commodities analyst at Commerzbank.
Oil prices fell towards $65 a barrel.
Brent crude fell more than 6%, falling below $70 a barrel. The sudden increase in OPEC+ production also contributed to lower prices. Ahead of the announcement of the wide-ranging tariffs on Wednesday evening, Brent crude was still trading at $75. There are fears that tariffs will further weaken oil demand, especially as China is the hardest hit by-for-tat tariffs.”
If other countries retaliate against U.S. tariffs with counter-tariffs, it could trigger a wave of tariffs, which will increase pressure on demand. Because energy imports are duty-free, U.S. refiners are not obligated to pay tariffs when importing crude oil from Canada and Mexico.”
However, demand for Canadian oil may fall in the short term, as U.S. refiners appear to have moved forward their purchase dates in anticipation of tariffs. Last week, U.S. imports of Canadian crude oil rose 11% to their highest level since the beginning of January, according to data from the U.S. Energy Information Administration.
This week saw oil prices fall sharply by more than 10% as President Donald Trump’s tariffs go into effect. A drop in global oil prices of more than 7% in a single day is rare, but it is not unusual. This usually portends disaster: the specter of war (which directly involves the United States), epidemics, internal conflicts between cartel members, or, in this case, the first new attack in an impending global trade war.
We’ve seen this before, not long ago. In fact, we saw exactly this during Trump’s first attempt to impose tariffs.
Oil market suffers sharp decline amid recession fears
The crude oil market fell sharply again on Friday, as markets still await the real possibility of a global recession in the near future. With this, the market has broken a major three-year support barrier.
WTI Technical Analysis
The sweet light crude oil market saw a sharp decline in Friday’s trading hours, even before the release of jobs figures in the US and Canada, as traders remain worried about the possibility of a global recession. We are now below the $65 level, which has been a key support level for the past three years. So, it will be interesting to see how far the price can fall. At this point, there is no need to try to catch a fallen knife, although I know that many individual traders will try to do just that.
At this point, the CL contract must prove its worth. In other words, restoring the $65 level to build any real confidence. But we saw a drop of more than 8% in pre-New York trading. At this point, it is very difficult to try to restore the market. In terms of short selling, the price of oil has fallen by almost 14-15% over the past day and a half. So, this may be a bit late.
Brent Technical Analysis
The Brent market has seen a significant decline, around 7.5% as I record, and we have been trading well below the support level for the last three years, so it is a very similar chart to expectations. If the market bounces off of here, it will need to recover $70 at the daily close to start rising. Any rebound around $70 is likely to be met with significant selling pressure, as oil sentiment is very bad.
Oil prices fall as China-U.S. trade war escalates
Oil prices fell to their lowest levels in more than four years on Friday, after China imposed retaliatory tariffs in response to U.S. trade measures earlier in the week.
In a major escalation of the ongoing trade war, China announced its decision to impose additional tariffs of 34% on all goods imported from the United States.
The move, set to take effect on April 10, comes in direct response to the Donald Trump administration’s recent decision to raise tariff barriers to their highest levels in more than a century.
The international community is preparing for a trade war, as countries prepare to take retaliatory measures against US protectionist policies.
Trump’s tariffs shock
The imposition of these tariffs shocked global financial markets, leading to a significant drop in investor confidence and a sharp drop in stock prices. The trade war, initiated by the United States, has disrupted global supply chains and created uncertainty in the international trade environment.
Escalating tensions between the world’s two largest economies have raised fears of a possible global recession and prompted calls to calm the trade conflict.
At the time of writing, Brent crude futures on the Intercontinental Exchange were at $65.05 per barrel, down 7.3%. The price of West Texas Intermediate crude on the New York Mercantile Exchange fell 8% to $61.68 a barrel. Both benchmark crudes fell to their lowest levels since the middle of the COVID-19 pandemic in April 2021. The contracts were also on track to post their worst percentage losses in more than two years.
Carsten Fritsch, commodities analyst at Commerzbank AG, said in a report: “There are fears that tariffs will further weaken oil demand, especially as China has been hit hard by the-for-tat tariffs.”
