Oil prices crash amid brewing Sino-US trade war

Brent crude has slipped below $65/bbl for the first time since the post-COVID era, amid escalating global trade tensions following a new wave of tariffs, market analysts say.

CONCEPT: Declining oil prices. Getty Images

Brent crude’s price took a significant hit over the weekend after China retaliated on Friday with additional 34% tariff on all US imports, in response to US President Donald Trump’s tariffs imposed on global trade partners on 2 April.

Following today’s drop, Brent crude futures are on track to hit their lowest levels since the peak of the COVID-19 pandemic in mid-2021, Reuters’ data shows. “Crude oil prices slumped… as the spectre of weakening demand surged amid rising trade tensions,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.

China is set to impose the additional 34% tariff from 10 April, market intelligence provider JLC reported. Other US trade partners across the world, including the EU, are also considering such moves.

These tariff threats could lead to a major trade war and dampen demand, potentially slowing the global economy and triggering sharp volatility across financial markets - with ripple effects already visible in the commodities sector, market analysts say.

“Oil prices are under significant pressure, with Brent witnessing its largest sell-off since August 2022,” two analysts from ING Bank noted.

Brent’s price plunged further after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) announced a surprise plan to bring back 411,000 b/d of crude oil to the market in May, up from previous plan of 135,000 b/d.

“Worse-than-expected reciprocal tariffs from the US have raised demand fears. However, OPEC+ has only added to these concerns by announcing a larger-than-expected supply increase for May,” ING Bank’s analysts added.

By Aparupa Mazumder

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