Oil Prices Drop Amid Trade War Concerns
Oil prices declined as U.S. President Donald Trump threatened tariffs on China, raising fears of escalating trade wars. Brent crude fell close to $79 per barrel, while West Texas Intermediate traded below $76.
The tariff threat stemmed from China's alleged involvement in the fentanyl trade. Trump also hinted at possible levies on Canada and Mexico, both major crude exporters to the U.S. According to industry experts, Canadian suppliers are rapidly increasing their crude exports to circumvent potential tariffs.
Analysts at Goldman Sachs Group Inc. cautioned that tariffs could lead to higher gasoline costs for American consumers. However, crude prices remain elevated year-to-date, supported by U.S. sanctions on Russia that have disrupted oil markets.
According to Warren Patterson, head of commodities strategy at ING Groep NV, the oil market is shifting its focus from Russian sanctions to the growing threat of trade tensions. The possibility of tariffs also strengthens the U.S. dollar.