28 Feb 2025

Oil prices have retreated from $70.00 due to renewed concerns regarding China's economic growth following recent tariff threats from former President Trump. He announced an additional 10% tariff on Chinese imports, citing the influx of fentanyl into the U.S. market as a significant issue. Investors are also closely monitoring the upcoming meeting between Trump and Ukrainian President Zelenskyy regarding a minerals deal. During European trading hours on Friday, West Texas Intermediate (WTI) futures on NYMEX declined to approximately $69.20. The oil price had briefly recovered to around $70.00 on Thursday after bouncing back from a two-month low of about $68.30 reached on Wednesday.

The oil market is experiencing considerable selling pressure as the latest tariff threats from former President Trump have heightened concerns about global economic growth. In a tweet on Truth.Social, Trump indicated his intention to impose an additional 10% tariff on China, emphasizing that the majority of drugs entering the U.S. from Canada and Mexico are primarily fentanyl, which is produced and supplied by China.

The introduction of additional import tariffs on Chinese goods by the United States is anticipated to diminish the competitiveness of Chinese products in the international market. This development suggests a pessimistic outlook for oil demand, particularly as China holds the position of the world's largest oil importer.

President Donald Trump has also announced that Canada and Mexico will be subjected to a 25% tariff starting March 4.

In the meantime, increasing optimism regarding a resolution to the conflict between Russia and Ukraine has already placed downward pressure on oil prices. Investors are looking forward to President Trump's meeting with Ukrainian President Volodymyr Zelenskyy on Friday, where they are expected to discuss a minerals agreement as well as potential peace terms for Ukraine. Any positive advancements towards peace between Russia and Ukraine could negatively impact oil prices, especially if the Eurozone and the United States decide to lift sanctions on Russia, leading to a rise in seaborne oil supplies in the global market.