Oil prices rose in Asian trading on Monday after three consecutive weekly declines despite U.S. President Donald Trump's new tariff announcement on all steel and aluminum imports.
At 20:41 ET (01:41 GMT), Brent Oil Futures rose 0.5% to $75.06 a barrel, while Crude Oil WTI Futures expiring in March gained 0.6% to $71.13 a barrel.
Both contracts lost nearly 2% last week after a sharp jump in U.S. crude stockpiles, and Donald Trump’s pledge to boost production.
Chinese tariffs on tap, Trump signals levies on steel and aluminum imports
The imposition of a 10% tariff on Chinese imports by the U.S. has led to retaliatory measures from China, including tariffs on U.S. oil, liquefied natural gas (LNG), and coal.
China's counter-tariffs are set to take effect later in the day.
In addition to tariffs on Chinese goods, the U.S. has imposed a 25% tariff on all steel and aluminum imports, Trump said on Sunday.
These metals are essential for constructing pipelines, storage tanks, and other infrastructure critical to the oil industry. The increased costs for these materials could lead to higher expenses for energy companies, potentially slowing down infrastructure projects and affecting the overall supply chain.
The ongoing trade disputes and the imposition of tariffs are contributing to a complex environment for the global oil market, with potential repercussions for both supply and demand dynamics.
The resulting uncertainty and potential tightening of global supply are contributing to the current rise in oil prices.
The imposition of tariffs has heightened inflationary fears, as higher import costs can lead to increased prices for goods and services. Investors often view commodities like crude oil as hedges against inflation, leading to increased demand and higher prices.
While the immediate impact of these tariffs on oil and gas prices may be limited, the broader implications for the energy sector could be significant.
China demand concerns grow on soft inflation
China's latest inflation data for January, paints a weak picture of the country’s economic recovery, adding downward pressure on global oil prices.
The consumer price index (CPI) rose moderately in January, while the producer price index (PPI) saw consistent declines.
This data highlights persistent weakness in both household spending and industrial activity, key drivers of oil demand in the world’s second-largest economy.
A falling PPI indicates continued struggles in the manufacturing sector, which is a major consumer of crude oil. With Chinese factories facing prolonged deflationary pressures, reduced industrial output is likely to limit demand for oil and refined products such as diesel, further weighing on prices.
Additionally, global markets are closely watching China’s policy response. Weak inflation could prompt Beijing to roll out more stimulus measures, such as interest rate cuts or infrastructure spending, which could eventually support oil demand.
Source : Investing