Trump’s tariff threat pushes oil to five-month low

By Irwin herself

HOUSTON (Reuters) – Brent and U.S. crude futures fell more than $2 a barrel, or more than 3 percent, on Friday, as U.S. President Donald Trump’s threat to impose increased tariffs on China cast a pall over demand expectations in a market seen as oversupplied.

“The sell-off was driven by a shift to risk-off markets in the wake of Trump’s threat to impose tariffs on Chinese goods,” said Giovanni Stanovo, an analyst at UBS.

The settlement price for Brent crude futures was set at $62.73 per barrel, down $2.49, or 3.82%, which is the lowest level since May 5.

US West Texas Intermediate crude closed at $58.90 a barrel, down $2.61, or 4.24 percent, the lowest level since early May.

“Today is the culmination of a variety of factors, including Trump’s threat of a massive increase in it Definitions “It’s about China, and it’s just the latest,” said Andrew Lipow, president of Lipow Oil Associates.

OPEC production increases, additional production gains in North and South America, and the loss of geopolitical risk following the Gaza ceasefire deal “are all factors that can be layered on top of Trump’s announcement this morning of tariffs on China,” Lipow said.

Trump, who was scheduled to meet with Chinese President Xi Jinping in South Korea in about three weeks, complained on social media about what he described as China’s plans to hold the global economy hostage, after China dramatically expanded its export controls on rare earth elements on Thursday. China dominates the market for such items, which are essential for manufacturing technology.

In addition to threatening to cancel the meeting with Xi, Trump said he may impose a significant increase in tariffs on Chinese goods.

Israel and the Palestinian Hamas movement signed a ceasefire agreement on Thursday in the first phase of Trump’s initiative to end the war in Gaza.

Under the agreement, which the Israeli government ratified on Friday, fighting will stop, Israel will partially withdraw from Gaza, and Hamas will release all remaining hostages it captured in the attack that precipitated the war, in exchange for hundreds of prisoners held by Israel.

Several ships have been attacked by the Iran-aligned Houthis in Yemen since 2023, targeting ships they see as linked to Israel in what they describe as solidarity with the Palestinians over the war in Gaza.

ANZ Bank analyst Daniel Hynes said the Gaza ceasefire agreement meant the focus could shift back to the looming oil surplus, as OPEC continues to wind down production cuts.

A smaller-than-expected increase in November production agreed upon by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) on Sunday eased some concerns about a supply glut.