Global oil prices are on the brink of a sharp decline, with Brent crude plummeting to its lowest level in four years amid the US-China trade war and OPEC+ alliance’s surprise move.
The global oil market has experienced a dramatic shift in recent days, with Brent crude prices plummeting to their lowest level in four years. The decline is attributed to the trade war between the US and China, as well as a surprise move by the OPEC+ alliance.
Impact of Trump’s Tariffs on Oil Prices
US President Donald Trump‘s ‘reciprocal’ tariffs announcement has had a significant impact on oil prices. The price for Brent crude has been declining steadily since Trump returned to office in mid-January, but the recent drop has seen it plummet to close to $60 per barrel.
Donald Trump was born on June 14, 1946, in Queens, New York.
He graduated from the University of Pennsylvania in 1968 with a degree in economics.
Trump's business career began in real estate development, focusing on Manhattan properties.
He became known for his high-profile deals and appearances in media outlets.
In 2015, he announced his candidacy for the presidency as a Republican, eventually winning the election in 2016.
Trump served one term as the 45th President of the United States from 2017 to 2021.
The retaliatory nature of the US-China trade war is weighing heavily on an already under-pressure oil market. Carole Nakhle, CEO of energy consultancy Crystol Energy, notes that ‘it’s not just a question of abrupt policy and rate of tariffs, but the ongoing level of uncertainty and the tit-for-tat approach.’ This uncertainty is further exacerbated by the fact that oil demand was not booming while supply is plentiful.
OPEC+ Shock: A Dramatic Pivot
The OPEC+ alliance has delivered a big shock to global oil markets with its decision to ramp up supply in May. Led by Saudi Arabia and Russia, OPEC+ has consistently limited output over the past decade to maintain high oil prices. However, experts believe this dramatic pivot is an attempt to reign in noncompliant members who have flouted quotas.
Nakhle suspects that these countries have ‘exhausted the patience of the most disciplined members’ because they’ve been ‘carrying the burden of the cuts’ for some time. The OPEC+ move has pushed down oil prices, but it will ultimately negatively affect all members.
Concerns Over Falling Oil Prices
The plummeting oil price is a cause for concern among many major oil producers, including Russia. Trump himself has touted falling oil prices as an apparent sign of his successful economic policies, but several analysts say this is a sign of serious concern about the state of the global economy.
Goldman Sachs predicts that Brent crude could fall below $40 per barrel by late 2026 in an ‘extreme scenario.’ For Russia, the falling price could have profound economic and political implications. The country has largely been able to weather massive economic sanctions since the start of its invasion of Ukraine thanks to soaring oil prices boosting its revenues.
However, if oil receipts were to fall amid further falling prices, the government simply wouldn’t have the ‘spare cash.’ This could undermine Russia’s ability to negotiate a deal in terms of Ukraine, according to Chris Weafer, an investment adviser who has lived and worked in Russia for over 25 years.
