Oil Prices Drop Amid Trade War Fears
Oil prices held losses as President Donald Trump threatened tariffs on China, raising concerns over trade wars on multiple fronts. Amid concerns over potential levies, Canada has increased crude exports to the US.
Trump mentioned considering a 10% tariff on China in response to fentanyl imports. Goldman Sachs Group Inc. warns that such tariffs, which could begin on February 1, would increase gasoline costs for American consumers.
Despite recent declines, crude prices remain higher due to US sanctions on Russia, which have disrupted physical oil and tanker markets. Trump hinted at further penalties on Russia if President Vladimir Putin fails to negotiate on Ukraine.
"The oil market's focus is gradually shifting from Russian sanction risks to the growing threat of escalating trade tensions," said Warren Patterson, ING Groep NV's head of commodities strategy. He also noted that the tariff threat supports the US dollar.