Brent Crude Plunges 6% Amid US-China Trade Tensions, Struggles to Hold $62 Per Barrel
Global oil markets are facing renewed pressure as Brent crude prices fell more than 6% in October, struggling to maintain levels above $62 per barrel. This decline deepens the year-to-date slump to over 17%, continuing a challenging trend for oil that began the year at around $74 per barrel. Analysts are closely watching developments, noting that geopolitical and economic factors are driving market volatility.
Experts point to ongoing trade tensions between the United States and China as a major contributor to the drop. Suvro Sarkar, an analyst at DBS Bank, noted that “while talks between the two sides continue, the Chinese side has vowed to ‘fight to the end’ if necessary—and oil producers are sensitive to such rhetoric.” The uncertainty surrounding U.S. economic policy, particularly interest rate expectations, has added to the downward pressure.
The Federal Reserve has already reduced interest rates by 0.25%, bringing the federal funds rate to between 4.00% and 4.25%, with market expectations of two more cuts before year-end. While lower rates typically ease borrowing costs, they can also make the U.S. less attractive to investors seeking higher returns, which has a ripple effect on oil prices. The slowing U.S. economic outlook combined with a weaker dollar is now weighing heavily on crude, reversing the historical pattern where oil and the dollar often moved in opposite directions.
The relationship between oil prices and the U.S. dollar has evolved in recent years, analysts say. As U.S. crude exports have climbed steadily—averaging over 4.1 million barrels per day in 2024, a record high—oil prices and the dollar have become increasingly correlated. A weaker dollar now no longer guarantees higher oil demand; instead, both tend to move in sync, meaning a drop in the dollar can pull oil prices down as well.
Brent crude’s decline reflects both short-term market jitters and broader structural changes. After peaking at $81 per barrel in mid-January, prices have faced recurring dips driven by tariffs, economic uncertainty, and global market dynamics. By mid-October, the benchmark has dropped sharply over 6% for the month, highlighting ongoing volatility as investors weigh trade developments, U.S. monetary policy, and the steady rise of America as a major energy exporter.
Source: nairametrics