Oil Fluctuates Amid Trade War Concerns and Sanctions on Iran
Oil prices experienced volatility this week as worries about a trade war between the US and China overshadowed President Trump's increased economic pressure on Iran.
Global Growth Concerns
Brent crude declined towards $76 per barrel after fluctuating throughout the week due to announcements of tariffs and delays on duties for Canada and Mexico. Meanwhile, President Trump signed a directive on Tuesday authorizing the Treasury Secretary to implement sanctions and strengthen existing measures against Iran.
Inventory Data and Trade Impact
On Wednesday, traders anticipated inventory data from the US. The American Petroleum Institute reported an increase of 5 million barrels in commercial crude inventories last week, marking the second consecutive rise from the lowest level since March 2022.
Despite China's swift retaliation to Trump's levies, analysts believe the ongoing trade war is unlikely to significantly impact US crude exports to China. However, it could potentially affect economic growth and global consumption.
Market Health and Outlook
Oil prices have declined since reaching above $80 per barrel last month. Market volatility and softening physical market demand have contributed to the retreat. Brent's nearest timespread, an indicator of market health, closed at its weakest level in four weeks on Tuesday.
Despite the current volatility, analysts caution that supply disruptions, as seen in the past, could swiftly alter the market outlook.