Oil Prices Slip Amid USA-China Trade War Fears

Oil edged lower as concerns that trade war between the US and China would hurt global growth outweighed the announcement of reinforced sanctions on Iran. West Texas Intermediate fell 0.6% to settle below $73 a barrel, recovering from an earlier decline of as much as 3.4% that was driven by the prospect that dueling tariffs between the US and China would reduce energy demand. Oil pared losses after Trump signed a directive that aims to ramp up economic pressure on Iran. Over the past four years, sanctions evasion and more relaxed US enforcement have allowed Iran to boost oil exports by about 1 million barrels a day. Enforcing sanctions may slash the country’s exports by about two-thirds and could cost Iran roughly $30 billion a year. Earlier on Tuesday, China announced retaliatory measures against Trump’s tariffs, temporarily sending futures below where they ended 2024 for the first time this year. Speaking to reporters Tuesday afternoon, Trump said it was “fine” that China responded in kind with tariffs on some American products. China will place levies on a range of US goods, including oil and liquefied natural gas, in response to Washington’s “unilateral imposition of tariffs,” the country’s finance ministry said. The US shipped about 250,000 barrels of crude a day to China on average last year, a relatively small volume. But an escalation of trade disputes between the world’s two largest economies could have a broader impact and hurt global consumption.   The trade confrontation with China stands in contrast to Trump’s agreement to push back planned levies on Canada and Mexico by a month after the nations agreed to take tougher measures to combat migration and drug trafficking. The flare-up came as China’s markets were shut for the Lunar New Year holidays. Oil futures have faced a bumpy few weeks, first rising on a cold winter and US sanctions on Russian energy flows, before paring those gains after Trump took office and threatened blanket tariffs that could hamper global growth. Demand concerns remain pertinent, with top crude importer China’s manufacturing activity unexpectedly declining for a second month in January. Oil Prices: WTI for March delivery slid 0.6% to settle at $72.70 a barrel in New York. Brent for April settlement rose 0.3% to settle at $76.20 a barrel.

Oil edged lower as concerns that trade war between the US and China would hurt global growth outweighed the announcement of reinforced sanctions on Iran.

West Texas Intermediate fell 0.6% to settle below $73 a barrel, recovering from an earlier decline of as much as 3.4% that was driven by the prospect that dueling tariffs between the US and China would reduce energy demand. Oil pared losses after Trump signed a directive that aims to ramp up economic pressure on Iran.

Over the past four years, sanctions evasion and more relaxed US enforcement have allowed Iran to boost oil exports by about 1 million barrels a day. Enforcing sanctions may slash the country’s exports by about two-thirds and could cost Iran roughly $30 billion a year.

Earlier on Tuesday, China announced retaliatory measures against Trump’s tariffs, temporarily sending futures below where they ended 2024 for the first time this year. Speaking to reporters Tuesday afternoon, Trump said it was “fine” that China responded in kind with tariffs on some American products.

China will place levies on a range of US goods, including oil and liquefied natural gas, in response to Washington’s “unilateral imposition of tariffs,” the country’s finance ministry said.

The US shipped about 250,000 barrels of crude a day to China on average last year, a relatively small volume. But an escalation of trade disputes between the world’s two largest economies could have a broader impact and hurt global consumption.  

The trade confrontation with China stands in contrast to Trump’s agreement to push back planned levies on Canada and Mexico by a month after the nations agreed to take tougher measures to combat migration and drug trafficking. The flare-up came as China’s markets were shut for the Lunar New Year holidays.

Oil futures have faced a bumpy few weeks, first rising on a cold winter and US sanctions on Russian energy flows, before paring those gains after Trump took office and threatened blanket tariffs that could hamper global growth. Demand concerns remain pertinent, with top crude importer China’s manufacturing activity unexpectedly declining for a second month in January.

Oil Prices:

  • WTI for March delivery slid 0.6% to settle at $72.70 a barrel in New York.
  • Brent for April settlement rose 0.3% to settle at $76.20 a barrel.

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