Oil Swings on Tariff Concerns and Supply Disruptions
Key Points:
* Oil initially rose on supply worries after sanctions on Iran, but later declined on trade war fears.
* President Trump's retaliatory tariff plan and China's response have dampened price movements.
* Analysts anticipate a surplus in supply, with Brent prices forecast to fall below $60 by 2026.
Analysis:
Oil prices experienced volatility on Friday, fluctuating between gains and losses. The initial surge was driven by concerns over supply disruptions following the announcement of US sanctions against Iran. These sanctions target individuals, firms, and tankers, aiming to significantly reduce Iran's oil exports.
However, the threat of an escalating trade war between the US and China has overshadowed the supply concerns. The implementation of reciprocal tariffs and China's retaliatory duties have created uncertainty in the global oil market. Analysts believe these trade tensions could hamper global demand for oil.
Additionally, the prospect of a truce in the Ukraine-Russia conflict has also eased some supply concerns. President Trump's comments suggesting a path towards peace have raised hopes for a reduction in geopolitical tensions.
Despite the recent fluctuations, oil prices remain largely unchanged year-to-date for both WTI and Brent. Analysts anticipate a surplus in supply over the next several years, leading to a forecasted decline in Brent prices below $60 by the end of 2026.