Economy News – Baghdad
Oil prices are facing the prospect of a third consecutive weekly decline, driven by concerns that tariffs imposed by President Donald Trump on China could dampen crude demand, compounded by the initial phase of sanctions enacted by the new U.S. administration against Iran.
Brent crude is currently trading above $74 per barrel, having experienced a drop of more than 3% this week, while West Texas Intermediate (WTI) crude has dipped below $71.
Trump’s tariffs cover all imports from China, which is the world’s largest oil importer, and further restrictive measures are expected to take effect on Monday.
The ongoing trade conflict, coupled with the potential for escalation, has raised concerns about its possible impact on crude oil demand and the risk of oversupply later this year. The president has also pledged to boost U.S. oil production while maintaining sanctions on Iran, which could restrict oil flows from the OPEC member nation.
According to a note from RBC Capital Markets, penned by Halima Croft, “With the majority of Iranian crude oil exports directed towards China, we will be vigilant in observing whether these imports will be influenced by the broader tariff discussions between the U.S. and China.” The note further emphasizes, “Nonetheless, there are uncertainties surrounding the duration and enforcement of these measures.”
This week was turbulent for crude oil prices, which initially rose on Monday following the introduction of tariffs on Canada and Mexico—key foreign suppliers of oil to the U.S.—before declining with the announcement of a one-month tariff delay. These fluctuations have led to crude prices nearing their lowest closing levels for the year, as fears regarding demand growth due to the China conflict persist.
Additional indicators suggest a potential loosening of restrictions in material markets. Crude oil prices in Europe have fallen to several-month lows due to refinery maintenance activity, and the spread between the two nearest Brent contracts has contracted to 44 cents per barrel, compared to roughly one dollar at the close of the previous month.
Moreover, various technical indicators suggest that this week’s decline may have exceeded expected levels, with the nine-day relative strength index approaching 30 points, signifying an oversold condition in the oil market.
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