Oil prices fell by over 1 per cent on Thursday as markets weighed macroeconomic concerns from the United States as well as other countries, with Brent futures losing $1.07 or 1.5 per cent to trade at $69.88 a barrel and the US West Texas Intermediate (WTI) crude futures declining by $1.13 or 1.7 per cent to $66.55 a barrel.
The market was depressed from risk that tariff wars between the US and other countries could hurt global demand.
On Thursday, US President Donald Trump threatened to slap a 200 per cent tariff on wine, cognac and other alcohol imports from Europe, in addition to previous tariffs.
According to market analysts, this has opened a new front in a global trade war and has sent jitters to investors who are worried about stiffer trade barriers around the world’s largest consumer market.
This latest move is in response to the European Union’s plan to impose tariffs on American whiskey and other products next month, which itself is a reaction to Mr Trump’s 25 per cent tariffs on steel and aluminum imports that took effect on Wednesday.
The American president has threatened to impose an array of trade penalties since returning to the White House in January, though he has postponed action on many of them.
Also, uncertainty stemming from a US proposal for a Russia-Ukraine ceasefire also affected the market after Russian President Vladimir Putin said it agreed to stop fighting but any ceasefire should lead to a lasting peace and address root causes of the conflict.
The possibility of this could boost the availability of Russian oil.
Also on the supply front, the International Energy Agency reported that global oil supply could exceed demand by around 600,000 barrels per day this year, with global demand now expected to rise by just 1.03 million barrels per day, off last month’s forecast by 70,000 barrels per day.
The report cited deteriorating macroeconomic conditions, including escalating trade tensions.
Meanwhile, the Organisation of the Petroleum Exporting Countries said in its monthly report that the wider OPEC+ group which includes OPEC plus Russia and other allies, in February raised output by 363,000 barrels per day to 41.01 million barrels per day, led by Kazakhstan.
This comes as OPEC+ plans to phases out its most recent layer of output cuts beginning in April.