Oil prices dropped on Wednesday as markets priced in the uncertainty from changing US tariff policies and escalating US-China trade tensions.
The international benchmark, Brent crude, decreased by around 1.47%, trading at $63.44 per barrel at 09.42 am local time (0642 GMT), down from $64.38 at the previous session’s close.
US benchmark West Texas Intermediate (WTI) decreased by 1.58%, settling at $60.06 per barrel, compared to its prior session close of $61.03.
The tariff-driven standoff between the world’s two largest economies remains a top global concern.
At a press briefing, White House Press Secretary Karoline Leavitt said President Donald Trump was open to a trade deal with China. ‘The ball is in China’s court: China needs to make a deal with us, we don’t have to make a deal with them,’ Leavitt stated.
She added that the US was in talks with several countries that have not retaliated with tariffs, with new trade agreements expected to be announced soon.
China had responded to the US tariff hikes with identical measures. As a result of the tariff showdown, the US raised tariffs on Chinese goods to 145%, while China raised tariffs on American goods to 125%.
Although the US delayed tariffs on other countries for 90 days, tariffs on China took immediate effect. Markets continue to react to each new development in the trade dispute.
In a filing to the Securities and Exchange Commission, chipmaker Nvidia revealed that the US now requires an export license for shipping its H20 chips to China and certain other countries.
The company estimates the restrictions could cost $5.5 billion in revenue.
Reports also emerged suggesting China may have ordered its airlines to halt purchases of Boeing jets, further deepening trade war fears. The US-China trade war has dampened global oil demand expectations.
The International Energy Agency (IEA) cut its 2025 global oil demand growth forecast by 300,000 barrels per day (bpd), now projecting a rise of 726,000 bpd. Last month, the IEA expected a 1.03 million bpd increase.
OPEC also revised down its global demand growth estimate by 150,000 bpd.
Meanwhile, the American Petroleum Institute reported an unexpected rise in US crude inventories—up by 2.4 million barrels last week. Markets had expected a decline of 1.68 million barrels.
The surprise build in stocks has reinforced demand concerns in the world’s largest oil-consuming nation, contributing to downward pressure on prices.
The US Energy Information Administration is set to release official inventory data later today.
By Humeyra Ayaz
