Oil Prices Weaken, US Tariff Tensions Shadow Russian Supply Risk
World oil prices fell on Monday, as concerns over an escalating global trade war weighed on market sentiment, despite potential supply risks from Russia. West Texas Intermediate (WTI) crude futures hovered near $68 per barrel, down 0.7%, while Brent crude fell 0.4% to around $70.05 per barrel. This decline follows a brief period driven by speculation about new sanctions against Russia.
President Donald Trump's threat of 30% tariffs on imports from the European Union and Mexico raised concerns that global energy demand would weaken. A strengthening US dollar also added pressure, making commodities more expensive for overseas buyers. Market sentiment weakened, as evidenced by the decline in stock indexes and a reversal in the oil rally.
Investors had hoped that Trump's major statements regarding Russia would trigger new sanctions on Moscow's energy exports. The US president confirmed that Washington would send more weapons to Ukraine, signaling a shift in stance toward a more confrontational stance. This has fueled speculation that algorithmic traders such as CTAs (commodity trading advisors) will re-enter the market and buy oil, anticipating a supply glut.
However, concerns about slowing global growth remain dominant. A series of tariff letters issued by Trump to major trading partners, including Japan and Brazil, have added pressure on the energy demand outlook. These concerns have triggered selling by hedge funds and large investors, who have become increasingly bearish on oil since February.
On the other hand, data from China shows that oil demand remains strong. The country recorded a record trade surplus and increased crude oil imports, including from Iran. However, with OPEC+ beginning to relax its production policy, analysts predict a supply glut could emerge in the second half of this year, adding to the burden on global oil prices.
Source: (ayu-newsmaker)
