DTN Oil Update
Oil Futures Rise Despite China Imposing 125% Tariff on US Imports
HOUSTON (DTN) -- Oil futures edged up Friday morning as escalating trade tensions between the United States and China continued. Friday morning, the Chinese government announced it would impose retaliatory tariffs of 125% on imported goods from the U.S.
The front-month NYMEX WTI crude contract rose by $0.24 to $60.31 bbl while the ICE Brent futures contract for June delivery edged up by $0.24 to $63.57 bbl.
May RBOB gasoline futures contract increased by $0.0151 to $1.9764 gallon. The front-month ULSD futures contract edged up by $0.0059 to $2.0523 gallon.
In contrast, the U.S. Dollar Index fell by 0.95 points to 99.845, hitting its lowest level since Aug. 26, 2024.
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The Customs Tariff Commission of the State Council announced Friday morning that China would raise the additional tariffs on products imported from the United States to 125%, according to media reports.
This announcement came after the United States raised tariffs on Chinese imports to 125% on Wednesday, April 9, following U.S. President Donald Trump's announcement of an additional 84% levy on top of earlier tariff rounds of 10% enacted in February and March.
Oil futures prices have plummeted to four-year lows this week as the escalation of the trade war between the United States and China is expected to lead to a potential global economic slowdown and a recession in the U.S. economy.
Additionally, the announcement of a 90-day pause on reciprocal tariffs on 75 non-retaliatory countries trading with the U.S, has introduced more uncertainty into the oil futures markets, while the two main oil benchmarks continue their downward driven also by abundant supplies and weak demand.
The Energy Information Administration lowered on Thursday its estimates for WTI and Brent crude average prices for 2025 and 2026 due to uncertainty about global oil demand growth, ample supplies from OPEC+ additional output, and the effects of trade tariffs.
The EIA estimated an average price for WTI at $64 bbl during 2025 and $57 bbl for 2026, lower than the prior forecast of $65 bbl. For Brent, the EIA predicted an average price of $68 bbl in 2025 and $61 bbl in 2026.
"Lingering demand growth concerns have already led to neutral to bearish outlooks and calls for a balanced to slightly oversupplied market in 2025. The implementation of a 10% across-the-board import tax, combined with a 125% tariff on imports from China and China's retaliatory measures are fueling global recession fears," said Karim Bastati, analyst for DTN Energy.
The United States raised tariffs on Chinese imports to 125% on Wednesday, April 9, following U.S. President Donald Trump's announcement of an additional 84% levy on top of earlier tariff rounds of 10% enacted in February and March. In response, China's Customs Tariff Commission announced it would raise tariffs on U.S. goods from 34% to 84%, effective Thursday.
At the same time, the Trump administration announced a 90-day pause on reciprocal tariffs for most other countries, reducing those tariffs to a flat 10% during negotiations. The pause does not apply to China. Sector-specific tariffs, including those on automobiles, remain in effect.
However, the uncertainty surrounding the tariff war maintains bearish sentiment in the oil futures market, which has caused the two main crude oil benchmarks to hit their lowest levels in four years.
The Energy Information Administration lowered Thursday its estimates for WTI and Brent crude average prices for 2025 and 2026 due to uncertainty about global oil demand growth, ample supplies from OPEC+ additional output, and the effects of trade tariffs.
The EIA estimated an average price for WTI at $64 bbl during 2025, down from a previous estimate of $71 bbl, and $57 bbl for 2026, lower than the prior forecast of $65 bbl.
For Brent, the EIA predicted an average price of $68 bbl in 2025, down from a previous forecast of $74 bbl, and a fall to an average price of $61 bbl in 2026, from a previous estimate of $68 bbl, according to its monthly Short-Term Energy Outlook (STEO) report released Thursday.
