Oil Prices Remain Under Pressure From Trade War Fears

Crude oil prices were set to end the week with a third consecutive decline as worry about the effect of Trump’s tariffs and China’s retaliation to them dragged benchmarks down.

At the time of writing, oil was slightly up from Thursday, with Brent crude at $74.69 a barrel and West Texas Intermediate at $70.92 per barrel, but both were lower than they were on Monday, by over 2%.

The slide in prices followed the introduction of a 10% tariff on all Chinese imports into the United States, which prompted China to respond in kind, slapping a 10% import duty on U.S. crude and a 15% tariff on liquefied natural gas.

A Thursday announcement by the Department of Treasury that it would sanction several people and vessels carrying Iranian crude oil abroad somewhat limited the downward pressure on oil prices but the impact of the move is yet to manifest in full.

“Oil prices saw some stability return this morning following a volatile session overnight, as traders react to news of U.S. sanctions on Iranian crude exports to China,” IG analyst Yeap Jun Rong told Reuters.

“Nevertheless, (today’s) oil gains are limited, reflecting persistent concerns over supply and demand headwinds, including the potential for increased production from OPEC+ and the US, as well as tariff risks weighing on global oil demand,” he added.

ING commodity analysts, meanwhile, revised their general expectations about oil prices in 2025 this week, noting that “The supply risks facing the market due to sanctions mean that the floor for oil prices is probably a little higher than we had expected coming into this year. However, much will depend on how trade relations progress. A tougher stance from the US on trade will be a concern for global growth.”

BMI analysts pointed out the prospect of a full-blown trade war as a source of price pressure on oil as such a development could weaken demand for the commodity.