Oil Loses Ground Amid Trade War Threats from Trump
West Texas Intermediate (WTI) and Brent crude prices retreated on news of potential tariffs on China announced by President Donald Trump. Concerns over escalating trade conflicts weighed on the market.
Trump stated his consideration of a 10% tariff on Chinese imports in response to fentanyl smuggling from the country. Additionally, he has previously threatened tariffs up to 25% on Mexico and Canada, two major exporters of crude to the US.
The looming threat of tariffs has prompted increased exports of Canadian crude to the US to avoid potential higher costs. Analysts warn that tariffs could lead to increased gasoline and energy prices for consumers.
The US dollar has strengthened in response to the tariff threats, making dollar-denominated commodities like oil more expensive for buyers. However, crude prices remain elevated year-to-date, supported by US sanctions on Russia that have disrupted global oil markets.
Trump has indicated the possibility of further sanctions on Moscow if negotiations on Ukraine are not initiated.