The oil market climbed more than 4 per cent on Wednesday after the US President, Mr Donald Trump, said he would further increase tariffs on China but pause the tariffs he announced last week for most other countries, including Nigeria.
This development raised the price of Brent futures by $2.66 or 4.23 per cent to $65.48 a barrel as the US West Texas Intermediate (WTI) crude futures increased by $2.77 or 4.65 per cent to $62.35 per barrel.
President Trump authorized a 90-day pause and raised the tariff rate for China to 125 per cent, effective immediately.
The previously announced 104 per cent tariff on China kicked in earlier on Wednesday and China announced additional tariffs on US goods, imposing an 84 per cent tariff on US goods to cook off from Thursday.
Countries in the European Union agreed on Wednesday to impose 25 per cent tariffs on a range of US imports in a first round of countermeasures.
After the pause announcement, White House officials said the level for other countries, scores of which have sought negotiations with the US since President Trump first announced his tariff regime, will be brought down to a universal 10 per cent rate during the pause.
This includes Mexico and Canada, which the American president had previously exempted from his across-the-board 10 per cent tariffs.
Mr Trump said in a Truth Social post that he was raising the duties on Chinese imports to 125 per cent effective immediately “based on the lack of respect that China has shown to the World’s Markets.”
Market analysts noted that the escalating trade war between China and the US continued to pressure oil prices and is stoking fears of a global recession.
Also, the decision last week by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) to raise output in May by 411,000 barrels per day, is likely to push the market into surplus, limited oil’s gains.
In the US, crude inventories rose by 2.6 million barrels to 442.3 million barrels last week, the Energy Information Administration (EIA) said.
On Tuesday, the American Petroleum Institute (API) reported a draw of 1.057 million barrels in U.S. crude oil inventories amid a small gasoline (petrol) build.