Crude futures fell over 2% Thursday as traders reacted to fresh tariff threats from U.S. President Donald Trump, raising alarms over future oil demand in key growth markets. At 12:19 p.m. ET, Brent crude was trading down 1.80%, at $68.93 per barrel, while WTI dropped to $66.97, shedding 2.06% on the day.
In comments made Wednesday evening, Trump warned of a broadening tariff regime targeting Chinese imports, citing ongoing imbalances and Beijing’s trade practices. While no specific measures were announced, the tone of escalation rattled energy markets already facing macroeconomic headwinds.
The tariff remarks come amid signs of cooling demand in Asia’s industrial and transportation sectors. Chinese refinery throughput has slowed for the second consecutive month, and recent export data showed continued weakness across regional manufacturing hubs.
Futures traders responded with a broad selloff in crude and refined products. Gasoline prices also dropped, while diesel cracks in Asia edged lower.
No immediate response has been issued by China’s Ministry of Commerce, but analysts say any retaliatory action could directly impact crude flow dynamics between the two largest energy consumers.
Trump has also dispatched letters warning seven additional countries–Algeria, Brunei, Iraq, Libya, Moldova, the Philippines and Sri Lanka–that they could face tariffs ranging from 20% to 30% starting August 1, citing “common sense” and trade imbalance concerns. The letters signal a broader move to reassert U.S. leverage in trade negotiations, though Trump notably excluded major economic partners like Japan, South Korea and the EU, for now.
Meanwhile, Iraq has publicly downplayed the impact of the impending U.S. tariffs. The country’s Trade Ministry emphasized that crude oil–exempt from the new duties–represents its main export to the U.S., totaling around 200,000 barrels per day or roughly $4.5?billion annually. However, Iraqi officials view this moment as an opportunity to streamline and redirect non-oil trade flows, reducing reliance on third-party brokers and seeking more transparent, direct engagement with U.S. markets.
By Charles Kennedy for Oilprice.com
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