A prolonged trade war between the US and China has sparked demand fears, pushing prices down as potential tariffs on Canada and Mexico dominate headlines. While the US-Canada tariff threat expired with a 30-day postponement, oil markets are now assessing the impacts of another potentially even bigger conflict.
The main fear is that the US-China spat could seriously damage oil demand growth this year, already under pressure from weakening margins. Gold prices hit record highs as market uncertainty surrounding Donald Trump’s tariffs and retaliatory trade wars sent prices soaring to an all-time high.
OPEC+ agreed to stick to its production cut policy, scrapping the US Energy Information Administration and Rystad Energy as secondary sources. Ukraine struck another major Russian refinery, while Trafigura’s top official was sentenced to 32 months in prison for bribing Angolan officials.
China retaliated with oil and gas tariffs on imports from the US, targeting coal, liquefied natural gas, crude oil, and heavy machinery with a 15% tariff. Nigeria mandating domestic supply quotas for oil producers and Norway’s largest oilfield suffering a power outage are other market developments.
As tensions between the US and China escalate, investors remain cautious, with Goldman Sachs warning of limited impact on oil prices from US tariffs. The situation has sparked hopes of an upstream breakthrough in South Korea, where geoscientists have identified potential oil and gas discoveries.
Source: https://oilprice.com/Energy/Energy-General/Oil-and-Gas-Prices-Drop-Dramatically-on-Trade-War-Fears.html