The value of Brent crude shrank by 2.16 per cent or $1.39 to $62.82 per barrel on Tuesday as investors smell an increasing likelihood of a recession due to the escalating trade war between the United States and China, the world’s two biggest economies.
Also, the US West Texas Intermediate (WTI) crude futures went down by 1.85 per cent or $1.12 to $59.58 per barrel as the American government plans to impose a 104 per cent tariff on China from Wednesday, a White House official said.
This is an addition of 50 per cent more to tariffs after China failed to lift its retaliatory tariffs on US goods by a noon deadline on Tuesday set by President Donald Trump.
China vowed not to bow to what it called US blackmail after President Trump threatened the additional 50 per cent tariff on Chinese goods if the country did not lift its 34 per cent retaliatory tariff.
China’s Commerce Ministry said the country would fight to the end, boosting fears about a contraction of the global economy and likely recession.
Meanwhile, the US Trade Representative said that China has not indicated it wants to work toward trade reciprocity.
The European Union, too, is readying a full spectrum of countermeasures, including potentially taxing Silicon Valley giants.
Other major American trading partners are exacting pressure in other ways as Canada matched US auto tariffs and launched an advertising campaign across the border against President Trump’s trade policy.
This has led analysts to reduce their price forecasts with Goldman Sachs forecasting that Brent and WTI crude prices would be at $62 and $58 a barrel, respectively, by December 2025, and at $55 and $51, respectively, a year after that, under different scenarios.
Meanwhile, US crude and distillate inventories fell while gasoline (petrol) stocks rose last week, according to the American Petroleum Institute (API) figures on Tuesday.
Crude stocks fell by 1.1 million barrels in the week ended April 4, gasoline inventories rose by 210,000 barrels and distillate stocks fell by 1.8 million barrels, the API said.
Official weekly oil inventory data from the US Energy Information Administration (EIA) is due later on Wednesday.