Market Analysis

Oil Slides Amid Growing Concerns Over Tariff Impact on Demand

Amos Simanungkalit · 11 Mar13.3K Views

Image Credit: Reuters

Oil prices declined for a second consecutive day in early Tuesday trading, fueled by concerns that U.S. tariffs on Canada, Mexico, and China could slow global economies and reduce energy demand, while OPEC+ increases its supply.

Brent futures dropped by 29 cents, or 0.42%, to $68.99 a barrel at 0016 GMT, while U.S. West Texas Intermediate crude fell by 36 cents, or 0.55%, to $65.67 a barrel. President Donald Trump's protectionist policies have caused turmoil in global markets, with tariffs being imposed and then delayed on major U.S. oil suppliers, Canada and Mexico, and duties raised on Chinese goods. In response, China and Canada have also implemented their own tariffs.

Over the weekend, Trump stated that the U.S. economy is likely facing a "period of transition," but he refrained from predicting a recession, despite growing concerns in the stock market about his tariff decisions.

"Trump's remarks triggered a selloff as investors began pricing in the risk of weaker demand growth," said Daniel Hynes, senior commodity strategist at ANZ.

U.S. stocks, which often mirror crude prices, took a significant hit on Monday, with all three major indexes seeing sharp declines. The S&P 500 experienced its largest one-day drop since December 18, and the Nasdaq plunged 4.0%, marking its biggest single-day percentage drop since September 2022.

U.S. Commerce Secretary Howard Lutnick stated on Sunday that Trump would maintain pressure on tariffs affecting Mexico, Canada, and China.

On the supply side, Russia's Deputy Prime Minister Alexander Novak announced that OPEC+ members agreed to start increasing oil production from April but could reverse this decision if market imbalances occur.

In the U.S., crude oil stockpiles are expected to have risen last week, while distillate and gasoline inventories likely decreased, according to a preliminary Reuters poll conducted on Monday.

The poll was taken ahead of reports from the American Petroleum Institute (API) due at 4:30 p.m. EDT (2030 GMT) on Tuesday and the Energy Information Administration (EIA) on Wednesday at 10:30 a.m. EDT (1430 GMT).