- WTI price depreciates amid rising fears following US-China trade war escalation.
- China slapped a 15% tariff on US coal and LNG imports, along with an additional 10% tariff on crude Oil.
- OPEC+ confirmed its plan to gradually increase Oil production starting in April.
West Texas Intermediate (WTI) crude Oil price continues to decline for the second consecutive day, trading near $71.50 per barrel during European hours on Tuesday. The downturn comes amid dampened market sentiment following China’s announcement of new tariffs on US goods in retaliation to US President Donald Trump’s trade measures, fueling concerns of a potential trade war between the world’s two largest economies.
China’s Commerce Ministry imposed a 15% tariff on US coal and liquefied natural gas (LNG) imports, along with an additional 10% levy on crude Oil, farm equipment, and certain automobiles, effective February 10. Additionally, China introduced export controls on key metals—including tungsten, tellurium, ruthenium, and molybdenum—citing national security concerns.
Market participants are closely monitoring trade negotiations. On Monday afternoon, President Trump stated he expected to speak with China within 24 hours, warning of “very, very substantial” tariffs if a deal is not reached. Meanwhile, he postponed planned tariffs on Canada and Mexico for a month after securing agreements to strengthen border security and combat drug smuggling.
In energy markets, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) reaffirmed its policy of gradually increasing Oil output from April and removed the US Energy Information Administration (EIA) from its list of monitoring sources. Since returning to office in January, Trump has urged OPEC to lower Oil prices, arguing that elevated prices are benefiting Russia amid its ongoing war in Ukraine.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Source: https://www.fxstreet.com/news/wti-falls-to-near-7150-as-chinas-tariffs-on-us-imports-dampen-market-sentiment-202502040848