- The Oil price slides to near $67.50 as the global trade war intensifies.
- US tariffs and counter-tariffs, its major trading partners, would reduce global Oil demand.
- The OPEC+ is on track to increase Oil production by 138K barrels per day from April.
West Texas Intermediate (WTI), futures on NYMEX, falls sharply to near $67.50 in Wednesday’s European session. The Oil price weakens as investors worry about the Oil demand outlook amid intensifying global trade tensions.
On Tuesday, China, Canada, and Mexico announced retaliatory tariffs on imports from the United States (US). On the same day, 25% tariffs on Canada and Mexico and an additional 10% tariff on China went into effect.
US President Donald Trump also reiterated that his plans of introducing reciprocal tariffs are on and will come into effect on April 2.
Market participants believe the escalating tariff war has paused employers across the globe from making fresh business investments as Trump has not unveiled a detailed import duty plan yet. Such a scenario would reduce the Oil demand in the short-term, weighing on the Oil price significantly.
Apart from escalating global trade tensions, confirmation from the OPEC+ for increasing Oil output for the first time since 2022 has also reduced the appeal of the Oil price. The OPEC+ is on track to increase its Oil production in April by 138K barrels per day.
Meanwhile, the Oil price has also failed to capitalize on tumbling US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, falls slightly below 105.00, the lowest level seen this year. Going forward, investors will focus on the US Nonfarm payrolls (NFP) data for February, which will be released on Friday. The US labor market data will influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook.
