Oil Rises After Three-Day Drop with Trade War in Focus
Oil rose after a three-day decline as a slightly calmer tone returned to global markets, with traders assessing the latest tariff moves by U.S. President Donald Trump and the possibility of retaliatory action.
Brent rose above $65 a barrel after hitting a four-year low in the previous session, while West Texas Intermediate traded near $62. Trump has threatened to impose additional levies of 50% on Chinese imports, while Beijing has responded by saying it is ready to “fight to the end” as the two countries tussle.
Crude along with equities, bonds and other commodities have been volatile this month as the U.S. president continues his aggressive trade policies. The unrest has stoked concerns about a global slowdown or recession that would hurt energy demand. At the same time, OPEC+ delivered a larger-than-expected output increase, denting the outlook for a balanced oil market.
Trump’s threat to slap a 50% tariff on Chinese goods would be in addition to the 34% tariffs imposed on all imports from the country that will kick in Wednesday and the 20% levy imposed earlier. That effectively doubles the price of importing any goods shipped from China to the U.S. Elsewhere, trade chiefs in the European Union are considering a full spectrum of retaliatory measures against sweeping U.S. tariffs.
“The risk of a recession is only going to increase and the perception of global oil demand is going to fall unless we hear some signs that Trump is working with the EU or China in a more constructive capacity,” said Chris Weston, head of research at Pepperstone Group in Melbourne.
Chinese crude buyers are likely to cut American oil imports as the trade war drags on, including levies imposed by Beijing on U.S. goods, according to local industry consultant JLC. Companies could look to source more cargoes from Russia, the Middle East, West Africa and South America, it said.
The escalating trade war has prompted banks including Goldman Sachs Group Inc. and Morgan Stanley to cut their oil price forecasts for the coming quarter. Societe Generale SA also cut its outlook, citing the threat posed by U.S. tariffs to China’s economy and global crude demand.
Brent for June settlement rose 1.3% to $65.07 a barrel as of 11 a.m. in Singapore.
It hit a low of $62.51 on Monday.
WTI for May delivery rose 1.5% to $61.62 a barrel.
Source: Bloomberg
