Oil falls in price amid rising US oil inventories and a customs war between China and the US

Oil prices fell on Wednesday as rising US inventories and fears of a new Sino-US trade war fueled fears of weaker economic growth, offsetting renewed efforts by US President Donald Trump to halt Iranian oil exports, Reuters reports, UNN writes.

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Futures for Brent crude oil fell 66 cents, or 0.87%, to $75.54 per barrel at 10:07 a.m. Greenwich time (12:07 a.m. Kyiv time). U.S. West Texas Intermediate (WTI) lost 61 cents, or 0.84%, to $72.09.

Oil traded in a wide range on Tuesday, with WTI falling 3%, the lowest since December 31, after China announced tariffs on imports of oil, liquefied natural gas and coal from the US in response to US tariffs on Chinese exports.

However, prices recovered after Trump resumed his campaign of "maximum pressure" on Iran to curtail its nuclear program, which he started in his first term, which reduced Iranian crude oil exports to almost zero.

Ongoing trade tensions between the US and China are said to be likely to reduce oil demand, putting downward pressure on prices.

"Trump's tariff chaos and trade war are not good for global growth and oil demand. Business investment and consumer spending are likely to fall due to these highly volatile and growth-dampening actions," said Bjarne Schildrop, chief commodities analyst at SEB.

"The oil market is now caught between growing fears that an escalation of the trade war will hurt global oil demand growth, on the one hand, and a possible sudden disruption of Iranian oil exports," he added.

According to the US Energy Information Administration, Tehran's oil exports brought in $53 billion in 2023 and $54 billion a year earlier. According to OPEC, production in 2024 reached its highest level since 2018.

Trump brought Iran's oil exports to almost zero during part of his first term after the re-imposition of sanctions.

"If these sanctions are re-imposed, the resulting supply cuts could support the upward momentum in oil prices, especially on the back of slower-than-expected supply adjustments by OPEC+ producers," said Ahmad Assiri, research strategist at Pepperstone.

Also, pressure on crude oil prices on Wednesday was exerted by higher data on US oil inventories overnight.

The rise in oil and fuel inventories in the world's largest oil consumer signals weak consumption, raising concerns about the impact of tariffs on the global economic outlook and energy demand.

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