Trump tariff risk pushes oil to five-month low

By Erwin Seba

HOUSTON (Reuters) -Brent and U.S. crude futures fell greater than $2 a barrel, or greater than 3%, on Friday as U.S. President Donald Trump’s risk to impose elevated tariffs on China forged a shadow over the demand outlook in a market seen as oversupplied.

“The sell-off was pushed by a shift to risk-off markets following Trump’s publish threatening tariffs on Chinese language items,” mentioned Giovanni Staunovo, an analyst with UBS.

Brent crude futures settled at $62.73 a barrel, down $2.49, or 3.82%, the bottom since Might 5.

U.S. West Texas Intermediate crude completed at $58.90 a barrel down $2.61, or 4.24%, the bottom since early Might.

“At this time is the end result of quite a lot of elements of which Trump’s risk of an enormous enhance in tariffs on China is simply the newest,” mentioned Andrew Lipow, president of Lipow Oil Associates.

Manufacturing will increase from OPEC, extra output positive aspects in North and South America, and the lack of geopolitical danger after the Gaza ceasefire settlement “are all elements that may be layered on high of Trump’s announcement this morning of tariffs on China,” Lipow mentioned.

Trump, who was resulting from meet Chinese language President Xi Jinping in about three weeks in South Korea, complained on social media about what he characterised as China’s plans to carry the worldwide financial system hostage, after China dramatically expanded its export controls on uncommon earth parts on Thursday. China dominates the marketplace for such parts, that are important to tech manufacturing.

Along with threatening to cancel the assembly with Xi, Trump mentioned he could impose an enormous enhance in tariffs on Chinese language items.

Israel and the Palestinian militant group Hamas signed a ceasefire settlement on Thursday within the first section of Trump’s initiative to finish the battle in Gaza.

Beneath the deal, which Israel’s authorities ratified on Friday, combating will stop, Israel will partially withdraw from Gaza, and Hamas will free all remaining hostages it captured within the assault that precipitated the battle, in alternate for a whole bunch of prisoners held by Israel.

Quite a few vessels have been attacked by the Iran-aligned Houthis in Yemen since 2023, concentrating on ships they deem linked to Israel in what they described as solidarity with Palestinians over the battle in Gaza.

The Gaza ceasefire deal means the main target can transfer again to the approaching oil surplus, as OPEC proceeds with the unwinding of manufacturing cuts, mentioned Daniel Hynes, an analyst at ANZ.

A smaller-than-expected November hike in output agreed by the Group of the Petroleum Exporting International locations and allies (OPEC+) on Sunday eased a few of these oversupply issues.