Oil Prices Swing as Tariff Battle Escalates
Oil prices flipped between gains and losses as traders reacted to U.S. President Donald Trump’s latest tariff threats and potential retaliation from China. West Texas Intermediate (WTI) hovered below $61 per barrel, showing high sensitivity to trade and market sentiment shifts.
President Trump proposed a 50% tariff on Chinese imports, prompting Beijing to vow a strong response. The uncertainty has roiled energy markets, equities, bonds, and other commodities, driving investor anxiety about global growth and oil demand.
Volatility Surges with Shifting Global Risk
Volume in oil futures has surged as volatility escalates. Stock markets initially rallied, supported by Treasury Secretary Scott Bessent’s suggestion that beneficial trade deals might still materialize. But as equities cooled, oil came off session highs.
Traders remain wary as global demand growth faces serious headwinds from the ongoing U.S.-China trade war. With both top global oil consumers entangled in economic conflict, energy markets face a potentially sharp downturn.
OPEC+ Output Increase Adds Pressure
Adding to bearish sentiment, OPEC+ surprised markets with a larger-than-expected production increase. The move dampens expectations for tighter supply and clouds the outlook for oil prices, especially in an already fragile demand environment.
Banks are cutting their forecasts. Societe Generale now expects WTI to drop to $57 by year-end, while Goldman Sachs warns Brent could plunge to $40 in a worst-case scenario.
U.S. Producers Demand Policy Clarity
U.S. oil executives are questioning how an aggressive trade stance will benefit domestic energy production. Drillers are already facing falling prices and rising uncertainty, while key buyers like China prepare to halt imports of American crude.
According to consultancy JLC, Chinese firms may instead turn to suppliers in Russia, the Middle East, West Africa, and South America to avoid tariff-related complications.
Data Delays Highlight Market Disruption
In response to market volatility, the U.S. Energy Information Administration (EIA) delayed its monthly oil report. The agency cited the need to re-run economic models to account for the fast-changing macro landscape.
Analysts at ING stated, “We’re likely to see further escalation, which will only exacerbate growth concerns and worries over oil demand.”
As the trade war deepens, and supply pressures rise, the energy market faces a turbulent road ahead — one that could keep oil prices on a volatile rollercoaster well into 2025.