Trump's Tariffs Cause Anxiety! Oil Prices Immediately Drop!
World oil prices fell by about 1% on Wednesday (July 16th), as investor concerns about the economic impact of the trade war outweighed positive signals from rising Chinese crude consumption. Brent crude fell 62 cents to $68.09 per barrel, while US WTI fell 72 cents to $65.80 per barrel.
This decline occurred despite signs of increasing fuel consumption, particularly in China and during the holiday season in the northern hemisphere. Chinese state-owned refineries began increasing production after completing maintenance to meet third-quarter fuel demand. Barclays estimates that Chinese oil demand rose by 400,000 barrels per day compared to last year.
However, the market remained nervous after US President Donald Trump threatened to impose a 30% tariff on European Union imports starting August 1st. The EU called these tariffs unacceptable and prepared to retaliate with tariffs on €72 billion worth of US goods if negotiations fail. Trump also issued a 50-day ultimatum to Russia to end its war in Ukraine, threatening heavy tariffs if no agreement was reached.
Concerns about the trade war and geopolitical tensions have created market uncertainty, dampening optimism about global economic growth. However, OPEC's monthly report stated that the global economic outlook will improve in the second half of 2025, primarily due to strong recoveries in Brazil, China, and India.
Meanwhile, data from the American Petroleum Institute showed that US crude oil, gasoline, and distillate inventories rose in the past week. Crude oil inventories increased by 839,000 barrels, gasoline by 1.93 million barrels, and distillates by 828,000 barrels. This increase in inventories also put pressure on prices because it indicates a potential oversupply in the US domestic market.
Source: (ayu-newsmaker)
