Brent nosedives amid growing global trade tensions

The front-month ICE Brent contract has plunged by $4.55/bbl on the day from Friday, to trade at $63.06/bbl at 09.00 GMT.

CONCEPT: Black oil barrels with a downward arrow depicting price decline. Getty Images

Upward pressure:

President Donald Trump-led US government has increased pressure on major oil exporters like Iran, Venezuela and Russia, indicating the possibility of stricter sanctions. This has lent some upward momentum to Brent crude’s price.

Last week, Washington stepped up its stance on Iran, calling for an immediate agreement to abandon Tehran’s nuclear warfare ambitions.

Tensions with Venezuela also escalated, as Trump threatened to impose 25% tariffs on imports from countries that continue to purchase Venezuelan oil and gas.

Downward pressure:

Brent crude has slipped below $65/bbl for the first time since the post-COVID era, amid escalating trade tensions between China and the US.

China announced additional 34% tariff on all US imports on Friday, in response to Trump’s tariffs imposed on global trade partners on 2 April. China is set to impose the additional tariff from 10 April. Other US trade partners are also considering such moves, according to reports.

“Oil prices are under significant pressure, with Brent witnessing its largest sell-off since August 2022,” two analysts from ING Bank said.

These tariff threats could lead to a major trade war, with ripple effects already visible in the commodities sector, according to market analysts. Some even fear a slowdown in global demand.

“The potential hit to [oil] demand could be significant if global growth is impacted [by the tariffs],” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.

By Aparupa Mazumder

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