Oil Prices Fall As Trade War Concerns Weigh On Global Economies

The prolonged standoff between the world’s two largest economies has raised alarms over its potential to slow global growth and weaken demand for fuel.

According to Baker Hughes, last week saw the steepest cut in oil rigs since June 2023, marking the third consecutive weekly decline in the total count of oil and gas rigs.

Source : Freepik

Crude oil prices continued their downward trend on Monday, weighed down by investor anxiety over the deepening trade conflict between the United States and China. The prolonged standoff between the world’s two largest economies has raised alarms over its potential to slow global growth and weaken demand for fuel.

Around 7 AM, Brent crude was trading at $64.47 per barrel, down by 29 cents or 0.45 per cent, while US West Texas Intermediate (WTI) crude slipped by 27 cents, or 0.44 per cent, to reach $61.23 a barrel. Both benchmarks have seen prices decline by around $10 since the beginning of April as geopolitical tensions ramp up, reported Reuters.

Tariffs, Inflation, and Industry Response

Tensions flared last Friday when Beijing responded to US tariff hikes by raising its own import duties on American goods to 125 per cent. This escalation followed President Donald Trump's decision to increase levies on Chinese products. While Trump later announced exemptions for smartphones, computers, and select electronics, US Commerce Secretary Howard Lutnick stated that critical tech imports, including semiconductors, will face new duties within two months.

Amid fears that export challenges could lead to price drops in China, Moody’s Analytics observed worrying inflation trends. "Inflation data from China were a window into an economy that is not in shape for a trade fight. Consumer prices fell for a second month in a row in year-on-year terms, while producer prices chalked up their 30 per cent straight fall," the firm said in a weekly note dated April 10.

Reflecting the uncertain market environment, US energy companies scaled back drilling activity. According to Baker Hughes, last week saw the steepest cut in oil rigs since June 2023, marking the third consecutive weekly decline in the total count of oil and gas rigs.

On a geopolitical note, some support for oil prices may come from Washington’s ongoing pressure campaign against Iran, the report noted.

US Energy Secretary Chris Wright said on Friday that the country may halt Iranian oil exports as part of efforts to curb Tehran’s nuclear ambitions. Diplomatic talks between US and Iranian officials held in Oman on Saturday were described as “positive” and “constructive,” with both sides agreeing to continue discussions next week.