Key points
- Brent, WTI could hit $62 and $58 by Dec: Goldman Sachs
- Brent crude trading at $60.36 per barrel
- West Texas Intermediate trading at $57.04 per barrel
- Both down by close to 4pc from Tuesday’s close
ISLAMABAD: Crude oil prices slumped to their lowest level since 2021 after US President Donal Trump announced a fresh 50 per cent tariff for Chinese imports.
Escalating tensions in the global trade war between the US and China triggered this dramatic drop.
Beijing has refused to withdraw its retaliatory 34 per cent tariffs announced in response to Washington’s imposition of a 34 per cent tariff rate on top of already existing levies.
According to energy news site Oilprice.com, Brent crude was trading at $60.36 per barrel and West Texas Intermediate at $57.04 per barrel, both down by close to 4 per cent from Tuesday’s close.
Since the start of the year, the benchmarks have shed lover $10 per barrel and most analysts expect the rout to deepen as fears run high that tariffs would sap oil demand.
Benchmarks slump
The two benchmarks have slumped by 16 per cent since Donald Trump’s April 2 announcement of tariffs on all US imports, Reuters news agency reported.
“The scenario has presented a case for a global recession, where fears of energy demand declining have emerged,” Alex Hodes, director of market strategy at financial services firm StoneX, said in a note.
US Trade Representative Jamieson Greer told US senators on Tuesday that China has not indicated it wants to work toward trade reciprocity.
Goldman Sachs forecast that Brent and WTI crude prices would be at $62 and $58 a barrel, respectively, by December 2025, and at $55 and $51, respectively, a year after that, under different scenarios.
Industry disruption
According to Natasha Kaneva, head of global commodities strategy at JP Morgan, the US administration has indicated a strong preference for reducing crude prices to $50 or lower, considering this goal a top priority among its objectives.
“This includes being willing to endure a period of industry disruption similar to the one experienced by the shale sector during the 2014 price war between OPEC and shale, if it ultimately results in lower cost of oil production,” Kaneva said.
