ETFs In Focus As Rising Trade War Tensions Hurt Oil Prices

All eyes are on how the struggling global markets will react to the new set of tariffs imposed on Sep 1. The slowdown in global business activities has also resulted in a decline in demand for oil. Accordingly, per a Reuters article, International Brent crude futures fell 59 cents to $58.66 a barrel (as on Sep 2).  U.S. benchmark WTI crude also declined 33 cents on the same day. 

Let’s see what’s causing the slump in oil prices:

Escalating Trade War

Retaliating to President Trump’s early August attack, China imposed new tariffs of 5% to 10% on $75 billion worth of U.S. goods, effective on some items from Sep 1 and others from Dec 15. The raised duties will be levied on nearly 5,078 U.S. productsincluding agricultural goods like soybeans and coffee along with whiskey, seafood, aircraft, and crude oil. Trump responded by raising tariffs on $550 billion worth of Chinese goods. He lifted existing tariffs to 30% from 25% on $250 billion of Chinese imports effective Oct 1. Moreover, tariffs planned on a further $300 billion in Chinese goods will be revised to 15% from 10% in two stages — Sep 1 and Dec 15.

As a result, per the Chinese Commerce Ministry, China recently filed a complaint against the United States at the World Trade Organization over U.S. import duties. Interestingly, this is the third tariff case China has filed against the United States to challenge China-related tariffs at the WTO. Moreover, the nations are facing difficulties in coming to common grounds for negotiation talks that are scheduled to take place in September.

OPEC Output Increases

Adding weakness to oil prices amid the slump in global demand, Organization of the Petroleum Exporting Countries (OPEC) reported a rise in production of crude oil for the first time this year in August. Production increases in Nigeria and Iraq eroded benefits from higher-than-pledged output cuts by Saudi Arabia and other Gulf producers. Moreover, Nigeria produced 80,000 barrels per day (bpd) more while Iraq’s production rose by 60,000 bpd in August. Interestingly, OPEC’s output in July 2019 was the lowest since March 2014.

1 2
View single page >> |

Disclosure: contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.