Oil prices dropped to their lowest point this year, as uncertainty over U.S. President Donald Trump’s trade announcements rattled markets. West Texas Intermediate (WTI) crude settled further below $69 per barrel, marking the lowest closing price of 2023. The session saw volatility, with thin trading volumes amplifying market swings.
Conflicting Trade Announcements from Trump
President Trump’s conflicting statements on trade added to the uncertainty. On Wednesday, he made a series of contradictory remarks about his plans to impose tariffs on Canada, Mexico, and the European Union. These mixed signals created confusion among traders and investors.
Trade Wars and Economic Growth Concerns
The uncertainty surrounding Trump’s trade policies, coupled with the threat of multiple international trade wars, has cast a shadow over the economic outlooks for both the U.S. and China. As the world’s two largest consumers of crude, any signs of slowing growth in these nations could weaken global energy demand. Additionally, the U.S. diesel market has shown signs of weakness, with futures for the fuel dropping 1.9% after government data revealed a significant rise in inventories.
Bjarne Schieldrop, chief commodities analyst at SEB AB, commented, “Trump’s actions are hurting consumer and business confidence, which again will weaken actual consumption.”
Shifting Tariff Timelines and Supply Concerns
Trump’s announcements added to market anxiety. He first stated that planned tariffs on Canada and Mexico would go ahead, before later saying they would be implemented in early April, about a month later than initially scheduled. The president also revealed plans to impose a 25% tariff on the European Union, before shifting focus to tariffs on automobiles and other topics.
The threat of increased oil supplies also weighed on prices. The White House confirmed plans for Ukrainian President Volodymyr Zelenskiy to visit the U.S., raising expectations that Russian crude may flow more freely if a peace deal is reached. At the same time, Iraq reached a deal with the Kurdistan region to resume oil exports.
Overcoming Bullish Developments
Despite the bearish market conditions, some potentially bullish news was overshadowed. Trump announced plans to terminate oil concessions given to Venezuela’s Nicolás Maduro by the Biden administration, imposed fresh sanctions on Iranian oil flows, and hinted that OPEC+ may delay its plan to gradually raise oil output. However, these announcements were overshadowed by trade and supply concerns.
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