Oil Slides as Traders See Trump Choosing Tariffs Over Sanctions
Oil declined amid risk-off sentiment in wider markets and a solidifying consensus that the Trump administration’s trade and foreign policy will rely more heavily on tariffs than on supply-constricting sanctions.
West Texas Intermediate fell 2% to settle near $73 a barrel, tumbling alongside equities as concerns about Chinese artificial-intelligence startup DeepSeek fueled a rout in US stock markets. Adding to the headwinds, economic activity in China, the world’s largest oil importer, faltered at the start of the year and factory activity shrank.
President Donald Trump unsettled markets by ordering tariffs against Colombia because of a dispute over migrants before pausing the actions after the country agreed to his conditions. He has also threatened action against China, Canada, Mexico and the European Union, while urging OPEC to help lower prices and arguing that declining oil prices could starve Russia of revenue and help halt the war in Ukraine.
The decline was exacerbated by algorithmic traders dumping bullish positions after futures breached the $75 price range, according to Daniel Ghali, a commodity strategist at TD Securities. Quant funds also are deleveraging amid the market decline, contributed to selling activity, he added.
WTI is still marginally higher for the year, driven by cold weather and sanctions on Russian oil that are spurring refiners in Asia to snap up alternative barrels. Those purchases have left key market gauges known as timespreads flashing strength, with the nearest contracts markedly higher than the ones further along.
Meanwhile, output at Iraq’s giant Rumaila oil field remains reduced by about 300,000 barrels a day after a fire last week, an official said. That was partly offset by rising production in Kazakhstan, where output hit a record of more than 2 million barrels a day on Sunday, according to a spokeswoman for the country’s energy ministry.
In Russia, the Ryazan oil refinery has suspended operations after an attack by Ukrainian drones late last week, Reuters reported.
WTI for March delivery fell 2% to settle at $73.17 a barrel in New York. Brent for March settlement was down 1.8% to $77.08 a barrel.
Source: Bloomberg
