Crude oil prices plunged on Wednesday, with Brent falling to $60.46 per barrel, down from $63 the previous day, and US West Texas Intermediate (WTI) dropping to $57.21. This marks the fifth consecutive session of declines following the announcement of sweeping tariffs by US President Donald Trump. The continued crash is raising alarms for oil-producing nations like Nigeria, where high production costs could severely impact projected margins and budget forecasts for 2025.
The drop in oil prices is largely driven by heightened trade tensions between the United States and China. In response to Trump’s tariff policy, China announced a sharp increase in tariffs on US goods from 34% to 84%, effective Thursday. Analysts warn that this tit-for-tat escalation is stoking fears of a global recession, with investor confidence shaken and energy markets reacting to potential long-term demand disruption.
European Union nations have also joined the fray, introducing a 25% tariff on select US imports in solidarity with other affected countries like China and Canada. Analysts from UBS and Rystad Energy suggest the trade war could threaten up to 100,000 barrels per day in Chinese oil demand growth. However, there’s speculation that domestic stimulus measures in China might offset some of these losses, if implemented swiftly.
In an attempt to ease global concerns, President Trump announced a 90-day pause on many of the reciprocal and 10% tariffs, while simultaneously raising duties on China. Despite this move, market analysts suggest the White House may be comfortable with lower oil prices around the $50 mark, as they believe the US oil and gas industry is robust enough to weather short-term disruptions. Still, uncertainty looms large across global markets, with economic indicators hinting at tougher times ahead.
Source: punch