Oil prices declined as US President Donald Trump escalated global trade tensions. His latest strategy to pressure Russia for a ceasefire in Ukraine did not include direct measures targeting Moscow’s energy exports. West Texas Intermediate (WTI) crude fell 2.1 per cent, settling below $67 a barrel after Trump threatened 100 per cent “secondary” tariffs on countries trading with Russia if a ceasefire is not reached within 50 days.
However, the absence of direct sanctions on Russian oil shipments, which some traders had anticipated, contributed to the price drop. Joe DeLaura, global energy strategist at Rabobank, noted the difficulty in enforcing secondary tariffs and limited investor confidence in their effectiveness. Before Trump’s Russia plan was unveiled, oil prices had briefly risen by 1.8 per cent.
DeLaura stated that only direct US action against the Russian oil or gas industry would have sustained the rally. Adding to the negative sentiment, Trump threatened 30 per cent tariffs on goods from the European Union and Mexico over the weekend, further dampening the outlook for energy demand.
These trade-related developments have overshadowed any supply concerns related to Russia, leading to a decrease in oil prices. Investors remain wary of the potential impact of escalating trade wars on global economic growth and, consequently, on energy consumption.
