Oil Prices Decline Amid Trade War Concerns

Oil prices experienced a decline of approximately 2% on Tuesday, hitting a two-week low as investors anticipated an increase in output from OPEC+ and expressed concern over the potential impact of US President Donald Trump’s tariffs on the global economy, which could curtail fuel demand. Brent crude futures decreased by $1.61, or 2.4%, settling at $64.25 per barrel.

Similarly, US West Texas Intermediate (WTI) crude saw a drop of $1.63, or 2.6%, to settle at $60.42. Both benchmarks reached their lowest closing values since April 10.

According to a consensus among economists surveyed by Reuters, President Trump’s assertive tariff policies on imports into the US have heightened the likelihood of a global economic downturn this year.

China, facing the most substantial tariffs, has retaliated with its own levies on US imports, thus escalating trade tensions between the world’s two largest oil-consuming nations. This ongoing trade conflict has prompted analysts to revise their projections downward for both oil demand and prices. Bob Yawger, an energy futures director at Mizuho, noted that trade between China and the US has diminished significantly, resembling a ‘semi-embargo type flow,’ adding that the absence of trade agreements increases the risk of global demand destruction.

The US trade deficit in goods expanded to a record level in March as companies accelerated imports in anticipation of Trump’s widespread tariffs, suggesting that trade exerted a considerable drag on economic expansion during the first quarter.

The repercussions of Trump’s trade war were evident across the corporate landscape on Tuesday. Delivery firm UPS announced plans to eliminate 12,000 management positions to reduce expenses. Additionally, automaker General Motors deferred its outlook and rescheduled its investor call to Thursday, pending potential modifications to trade regulations.

To mitigate the impact of auto tariffs, Trump was poised to issue an executive order that combines credits with relief from other taxes on parts and materials, following appeals from automakers to the administration. UK oil giant BP reported a worse-than-expected 48% decrease in net profit, amounting to $1.4 billion, attributable to weakened refining and gas trading. The energy market is currently awaiting earnings reports from US oil majors Exxon Mobil and Chevron later this week.