Oil prices were heading for their second straight weekly fall today against a backdrop of investor concern over recession sparked by the burgeoning trade war between the United States and China.
Brent crude futures were down 25 cents on the day, or 0.39%, at $63.08 a barrel by 1312 GMT while US West Texas Intermediate crude fell 30 cents, or 0.50%, to $59.77.
Brent and WTI are poised to register weekly declines of 3.8% and 3.5%, respectively, having both lost about 11% last week. Brent dipped below $60 a barrel at one point this week for its lowest since February 2021.
“China’s retaliations, with higher US tariffs, have weighed on market sentiment and dragged oil prices lower,” said UBS analyst Giovanni Staunovo.
China announced on Friday that it will impose a 125% tariff on US goods from Saturday, up from the previously announced 84%, after U.S. President Donald Trump raised tariffs against China to 145% on Thursday.
Trump this week paused heavy tariffs against dozens of other trading partners, but a prolonged dispute between the world’s two biggest economies is likely to reduce global trade volumes and disrupt trading routes, weighing on global economic growth and reducing demand for oil.
“Although the implementation of some tariffs, excluding those on China, was delayed by 90 days, the market damage had already been inflicted, leaving prices struggling to regain stability,” said Ole Hansen, head of commodity strategy at Saxo Bank.
BMI analysts, meanwhile, “expect prices will remain under pressure as investors assess ongoing trade negotiations and rising tensions between Washington and Beijing”.
The US Energy Information Administration on Thursday lowered its global economic growth forecasts and warned that tariffs could weigh heavily on oil prices. It reduced its U.S. and global oil demand forecasts for this year and next year.
China’s 2025 economic growth is expected to fall relative to last year’s pace, a Reuters poll showed, as US tariffs raise pressure on the world’s top oil importer.
The impact of tariffs could be “catastrophic” for developing countries, the director of the United Nations’ trade agency said.
ANZ Bank analysts forecast oil consumption will decline by 1% if global economic growth falls below 3%, said senior commodity strategist Daniel Hynes.
Oil prices declined on Thursday as traders focused on tariffs, largely sidestepping fresh U.S. sanctions on Iran in the process, PVM’s Varga said.
The US imposed sanctions on an Iranian oil trading network on Thursday, including a China-based crude oil storage terminal.
Nuclear talks in Oman between the US and Iran on Saturday will be given “a genuine chance” by Iran, its foreign ministry said.
