Oil Prices Ease as Trump Cuts China Tariffs: What This Means for Global Markets and Your Investments
NEW DELHI – Oil prices declined on Thursday despite US President Donald Trump’s announcement of a tariff reduction on China following his meeting with President Xi Jinping in South Korea. Market skeptics viewed the move as unlikely to signal the end of the ongoing trade war.
By 0642 GMT, Brent crude futures dropped by 20 cents, or 0.31%, to $64.72 per barrel, after gaining 52 cents in the previous session. Similarly, US West Texas Intermediate (WTI) crude futures fell 20 cents, or 0.33%, to $60.28 per barrel, following a 33-cent increase the day before.
President Trump revealed that tariffs on China would be lowered from 57% to 47% as part of a one-year agreement. The deal includes China’s commitment to resume purchasing US soybeans, maintain exports of rare earth elements, and curb fentanyl trafficking.
Vandana Hari, founder of the oil market analysis firm Vanda Insights, commented, “The market can now see it for what it is, sans all the build-up and political window-dressing. It’s nothing more than a pause in fighting and minor de-escalation that was being touted as a ‘trade deal.’”
On Wednesday, the US Federal Reserve cut interest rates, as expected, but signaled this may be the last reduction of the year amid a government shutdown impacting data reporting. Claudio Galimberti, chief economist at Rystad Energy, noted, “The Fed’s decision underscores a broader turn in its policy cycle – one that favours gradual reflation and support over restraint, providing a tailwind to commodities sensitive to economic activity.”
Previous gains in oil prices followed a larger-than-expected decline in US crude inventories, which fell by 6.86 million barrels to 416 million in the week ending October 24, far surpassing analyst estimates of a 211,000-barrel decrease.
Market attention now shifts to the upcoming OPEC+ meeting on November 2, where an additional supply increase of 137,000 barrels per day (bpd) for December is anticipated. Since April, the alliance has incrementally raised production by more than 2.7 million bpd, approximately 2.5% of global supply, partially reversing earlier cuts.
Additionally, Russia’s Lukoil announced plans this week to sell its international assets, indicating another significant change in the global oil landscape.
— Reuters
Special Analysis by Omanet | Navigate Oman’s Market
The recent modest easing in US-China trade tensions, coupled with the US Federal Reserve’s accommodative stance, signals a cautious but supportive environment for oil demand, although price volatility remains a risk. For businesses in Oman, this underscores the importance of strategic agility as OPEC+ plans further production increases could moderate prices, affecting revenues in the hydrocarbon sector. Smart investors and entrepreneurs should monitor global supply shifts and geopolitical developments closely, leveraging opportunities in energy diversification and value-added sectors to hedge against market uncertainties.
