Oil prices plummeted over 2% on Wednesday as the US saw a sharp increase in crude oil stockpiles, signaling weaker demand. The news sparked fears of softer economic growth due to concerns about a new China-US trade war.
US West Texas Intermediate (WTI) crude fell $1.67, or 2.3%, to $71.03 per barrel, while Brent crude futures dropped $1.59, or 2.09%, to $74.61. The Energy Information Administration reported a significant build in US crude oil inventories last week, with refiners doing maintenance work due to soft gasoline demand.
Experts point to two main factors contributing to the price decline: a new trade war between the US and China, which has led to tariffs on US oil imports, and the potential re-imposition of sanctions on Iran’s oil exports.
China’s retaliatory tariffs have reduced demand for US commodities, while the Trump administration’s threat to reimpose sanctions on Iran could lead to supply disruptions and higher prices.
“The oil market is caught between increasing fears that an escalating trade war will damage global oil demand growth on one hand and possible sudden disruption of Iranian oil exports,” said Bjarne Schieldrop, chief commodities analyst at SEB.
The recent surge in US crude inventories has left refiners with lower demand for crude, prompting them to focus on maintenance work. Experts warn that the situation could lead to softer economic growth due to reduced global energy demand.
Source: https://www.reuters.com/markets/commodities/oil-little-changed-market-shrugs-off-china-tariffs-iran-pressure-supports-2025-02-05