10/04/2025
Crude Oil Prices Drop as U.S.-China Tariff War Escalates
Crude oil prices have resumed their decline following a brief rally, as escalating trade tensions between the United States and China reignite concerns about global demand. Brent crude was trading at $64.70 per barrel, while West Texas Intermediate (WTI) stood at $61.71 at the time of reporting.
The recent downturn in prices follows President Trump’s move to intensify tariffs on Chinese imports, raising them to 125% effective immediately. This decision came shortly after China announced retaliatory tariffs of 84% on U.S. goods, vowing to “fight to the end.”
Although Washington granted a 90-day tariff reprieve to most trading partners, including a similar move earlier in the year with Canada and Mexico, the gesture has failed to stabilize oil markets. Analysts emphasize that the real impact stems from disrupted demand expectations, with China being the world's top crude importer and second-largest consumer.
Yeap Jun Rong, an analyst at IG, noted that optimism from the tariff pause would likely fade quickly, with broader downside risks for oil prices persisting amid ongoing geopolitical tensions and China's uncertain growth outlook.
In the U.S., WTI's slip below $60 earlier in the week has sparked concern among domestic producers. This level is seen as a critical breakeven point, prompting fears that sustained low prices could lead to reduced capital expenditures and affect shareholder returns.
Overall, the intensifying U.S.-China trade conflict continues to inject volatility into the oil market, with bearish sentiment likely to persist as demand-side pressures remain in focus.
