Oil prices were trading down 2% intraday, driven by ongoing demand fears combined with perceived progress on Iran nuclear talks and tariff whiplash, which continues to unsettle markets.
On Monday, April 28, at 2:57 p.m. ET, Brent crude was paring its 2% daily losses slightly, trading down 1.60% at $65.80, and West Texas Intermediate (WTI) was trading down 1.59% at $62.02.
Oil prices are responding most heavily to the impact of the trade war on demand.
On Monday, Beijing lashed out at Washington’s negotiating tactics, with Zhao Chenxin, deputy director of the National Development and Reform Commission, saying: “They make up bargaining chips out of thin air, bully and go back on their words.”
The Chinese official was responding to Trump’s statement earlier in the day that the U.S. would not lower tariffs on China unless Beijing offered up “something substantial”.
Last week, Rystad Energy told clients that if we get into a situation where we have a real and sustained trade war, it could cut China’s oil demand growth in half, which would lead to a massive dive in oil prices, Forbes reported.
With respect to Iran, an unnamed senior U.S. official reportedly told Reuters that “further progress” had been made during talks with Iran over the weekend, which Washington hopes will lead to assurances from Tehran that the country’s nuclear program will not be weaponized. Those assurances, in turn, could lead to an easing or reversal of sanctions, stoking fears that Iranian oil could flood the market.
Last Friday, Trump said he thought the talks would be successful, but Israel is attempting to throw a spanner in the works, with Netanyahu demanding that no relief be given to Iran unless all of its nuclear infrastructure is removed, in entirety. Israel is not satisfied with an Iran that will not weaponize its nuclear capabilities; instead, it wants an Iran stripped of the ability to even develop ballistic missiles, Al Jazeera reported. Trump insisted on Friday that regardless of Israel’s warring actions, the U.S. was not getting “dragged in”.
By Charles Kennedy for Oilprice.com
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