Oil slides amid growing trade tensions

ICE Brent has come under some pressure amid escalating trade tensions between major economies, raising concerns over global demand growth.

IMAGE: Flags of India and the US. Getty Images

US President Donald Trump has signed an executive order to impose an additional 25% tariff on Indian goods, citing India’s continued imports of Russian crude oil.

The move raises the total tariff on Indian exports to the US to 50%, marking one of the highest imposed on any country under the current US trade policy.

Oil prices have declined as the development has heightened demand growth concerns for commodities like oil, as it opens the door to a major economic escalation between the two trade partners, according to market analysts.

“Crude oil extended declines as the market tracked geopolitical events,” said ANZ Bank’s senior commodity strategist Daniel Hynes.

Meanwhile, these additional tariffs are unlikely to deter India from importing Russian crude, according to ING Bank’s head of commodities strategy Warren Patterson.

“Even if India moves to alternative supplies, we may not see a reduction in global supply, with Russia finding other buyers for its oil,” Patterson said.

Notably, the higher tariff is set to take effect in 21 days, leaving room for potential negotiations in the interim.

“The [oil] market is still hopeful that tariffs, effective 27 August, ultimately won’t be implemented,” Patterson added.

By Aparupa Mazumder

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