US crude oil prices fell on Tuesday as tariffs on China took effect, with US West Texas Intermediate (WTI) crude down $2.03 or 2.77% to $71.13 a barrel. The move was followed by China’s retaliation with 10% tariffs on crude oil, coal, and liquefied natural gas (LNG).
The US has also delayed tariffs on Mexico and Canada for a month. OPEC+ is expected to increase oil supplies in April.
China’s counter-tariffs may escalate trade tensions, according to analysts. “These actions are likely to give rise to a stronger US dollar, which can weaken oil prices,” said Kelvin Wong, senior market analyst at OANDA.
Trade tensions between the US and China could reduce demand for oil, putting pressure on prices. The two countries’ ongoing trade dispute may lead to a deliberate weakening of the yuan if the US fires back with more tariffs on Chinese exports. This could further weaken oil prices.
Source: https://www.reuters.com/markets/commodities/wti-oil-prices-down-after-mexico-canada-say-trump-agrees-pause-tariffs-2025-02-03