Oil prices dropped significantly on Thursday, following U.S. President Donald Trump’s announcement of reciprocal tariffs on global trading partners, heightening fears of a trade war that could undermine crude demand.
Brent crude futures fell by $1.97, or 2.63%, to $72.98 per barrel at 0033 GMT, while U.S. West Texas Intermediate (WTI) futures lost $1.98, or 2.76%, to $69.73 per barrel.
Trump declared April 2 as “Liberation Day,” unveiling new tariffs that could reshape global trade dynamics. Although both benchmarks settled higher the previous session, prices turned negative during Trump’s press conference on Wednesday, where he revealed a 10% baseline tariff on all U.S. imports and steeper duties on a range of major trading partners.
Bjarne Schieldrop, chief commodities analyst at SEB, commented on the uncertainty of the tariffs’ impact: “We know it will be negative for trade, economic growth, and consequently, oil demand growth. But we don’t know how severe the effects will be as they take time to materialize.”
However, the White House clarified that oil, gas, and refined product imports were excluded from the new tariffs.
The broader economic implications of Trump’s tariff policies, including potential inflation, slower economic growth, and escalating trade tensions, have contributed to downward pressure on oil prices.
Further compounding bearish sentiment, U.S. Energy Information Administration data on Wednesday revealed a surprise 6.2 million barrel increase in crude inventories, contrary to analysts’ expectations for a 2.1 million barrel decline.
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