Volatility continued to reign in oil markets at the start of the week, starting with a decline before bouncing back into the green early on Monday morning.
At the time of writing, Brent crude was trading at $64.88 per barrel, with West Texas Intermediate changing hands for $61.63 per barrel. The two benchmarks have shed some $10 each since the start of the month and the tariff wars.
The latest development in the wars was China’s move to hike tariffs on U.S. imports to 125% in response to Trump’s latest tariff hike. The Chinese also called Trump’s tariffs “a joke”.
“The U.S. side’s imposition of excessively high tariffs on China seriously violates international economic and trade rules, runs counter to basic economic principles and common sense, and is simply an act of unilateral bullying and coercion,” the Chinese Finance Ministry said in a statement.
Then, on Sunday, President Trump said there would be exemptions from the tariffs for things such as smartphones, semiconductors, and computers. While Beijing was weighing the implications of what some saw as a concession, the U.S. president followed up with an announcement that imported semiconductors will be tariffed, with the rate of the tariff to be announced soon.
These latest developments reinforce the sense of uncertainty that has been a big reason behind the oil price drop that began in early April. Economic data is not helping, it seems.
This points towards weaker oil demand going forward, although the prospect of U.S. action reducing Iranian oil exports played some counterbalancing role for prices. On Friday, Energy Secretary Chris Wright said the federal government was capable of halting oil exports from Iran. “We can follow the ships leaving Iran. We know where they go. We can stop Iran’s export of oil,” Wright said.
