(Bloomberg) — Oil fell as concerns that a trade war between the US and China will hurt global growth overwhelmed US President Donald Trump’s plan to ramp up economic pressure on OPEC member Iran.
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West Texas Intermediate dropped about 1% to trade around $72 a barrel, following a rocky start to the week that saw markets whipsawed by the announcements of tariffs, and then delays to duties on Canada and Mexico.
Meanwhile, Trump signed a directive on Tuesday asking Treasury Secretary Scott Bessent to use sanctions and tougher enforcement of existing measures to increase pressure on Tehran.
“Trump tariff chaos and trade war is no good for global growth and oil demand growth,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “But supply disruptions, as so often before, can then rapidly and suddenly turn everything around.”
US crude inventories rose 8.66 million barrels last week, according to government data released Wednesday. That’s the biggest increase in about a year.
Beijing on Tuesday issued a swift but restrained retaliation to Trump’s levies. A tug of war between the world’s two biggest economies is unlikely to rattle US exports of crude to China, but could hurt economic growth and global consumption.
Trump also proposed the US take over the Gaza Strip and assume responsibility for reconstructing the war-torn territory in a press conference with Israeli Prime Minister Benjamin Netanyahu. Trump suggested he would be open to deploying US troops to secure the area.
Crude prices have retreated significantly from a high above $80 a barrel last month. While much of that retreat has been spurred by Trump-led market volatility, pockets of the physical market are also showing signs of softening.
Brent’s nearest timespread — a premium on immediate delivery over futures for the next month that signals market health — closed at its softest level in four weeks on Tuesday.
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