Oil prices plummeted on Wednesday in international markets to $59 after China retaliated against raised U.S. tariffs with the same measure, igniting fears of a trade war that could stifle the global economy and energy demand.
On the London market, a barrel of oil was traded at a price $3.63 lower than yesterday’s closing price, at $59.12. A similar decrease was observed in the U.S. market, where it traded at $55.99 per barrel.
The markets were shaken on Wednesday by the escalation of the U.S.-China trade war. The U.S. raised the announced additional ‘reciprocal’ tariffs on Chinese imports from 34% to 84%, highlighting in its justification that China last week responded to the announced new U.S. tariffs with 34% tariffs on American goods. When considering additional tariffs from previous months, Chinese imports to the U.S. are now subject to tariffs of 104%. On Wednesday, Beijing responded by raising tariffs from 34% to 84%.
– “The aggressive Chinese response reduces the chances for a quick agreement between the two largest economies in the world, fueling fears of recession globally,” said Ye Lin from Rystad Energy.
– “If the trade war extends over a longer period, it could jeopardize China’s share in the growth of oil demand, which amounts to between 50,000 and 100,000 barrels per day, but the loss could be mitigated by a stronger push (from Beijing) for domestic consumption,” Ye added.
