ByIrina Slav– Apr 10, 2025, 1:26 AM CDT
Crude oil prices resumed their downward trajectory today after jumping higher on news that most trading partners would get a 90-day pause on tariffs. President Trump’s decision to double down on his tariff offensive against China, raising the total tariff burden on Chinese goods to 125%, effective immediately, has added to bearish sentiment.
The move followed China’s announcement of 84% tariffs on U.S. goods in response to Trump’s initial tariffs. Beijing has said it would “fight to the end”.
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Amid these developments, Brent crude was trading at $64.70 per barrel at the time of writing, with West Texas Intermediate at $61.71 per barrel.
According to analysts, the tariff spat between China and the United States has created excessive uncertainty on oil markets, although it might be more accurate to say that what it has created is quite a bit of certainty that the tariffs will disrupt demand and flows.
“We may expect oil prices to resume its broader downward trend once the optimism around the recent tariff reprieve fades,” IG analyst Yeap Jun Rong told Reuters. “Demand-side headwinds persist, with China’s growth outlook at risk from the ongoing tit-for-tat,” he added.
While Washington keeps cranking up the pressure on China, the rest of the world got a 90-day break on tariffs. Media demonstrated surprise with President Trump’s decision to announce a three-month pause, citing governments’ willingness to negotiate new trade deals, even though it was exactly the same move he made with Canada and Mexico earlier in the year.
This was not enough to reverse oil’s slide, however, because of China’s status as the biggest importer of crude in the world and the second-biggest consumer, after the United States. Chances are the decline will continue, although it might slow down a little while traders digest the implications of the trade war in the coming days.
In the U.S. oil patch, concern is growing already as WTI dipped below $60 per barrel earlier in the week. This is below the breakeven level for many producers, and even larger ones with lower costs may have to curb spending in shareholder return plans, according to analysts.
By Irina Slav for Oilprice.com
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