Oil retreats despite tariff pause as US-China trade war escalates

Oil prices retreated on Thursday as President Donald Trump ramped up a trade war with China, even as he announced a 90-day pause on tariffs aimed at other countries.

Brent futures fell 77 cents, or 1.18%, to $64.71 a barrel by 0320 GMT, while US West Texas Intermediate crude futures fell 65 cents, or 1.04%, to $61.70.

Following the tariff pause for most countries, the benchmark crude contracts had settled 4% higher on Wednesday after dropping as much as 7% during the session.
Trump, however, raised the tariff rate for China to 125% effective immediately, from the previously announced 104% tariff that had kicked off earlier on Wednesday.

The higher US tariffs on China leave plenty of uncertainty in the markets, ING commodities strategists said in a research note on Thursday.

“This uncertainty is still likely to drag on global growth, which is clearly a concern for oil demand,” they said.

“The ICE Brent forward curve is signalling a better-supplied oil market,” the strategists said, with ICE Brent shifting into contango from the January 2026 contract onwards.
China also announced an additional import levy on US goods, imposing an 84% tariff from Thursday.

“We may expect oil prices to resume its broader downward trend once the optimism around the recent tariff reprieve fades,” said Yeap Jun Rong, market strategist at online trading platform IG.

“Demand-side headwinds persist, with China’s growth outlook at risk from the ongoing tit-for-tat,” Yeap said.

Investors were eyeing mixed supply drivers as well.

“Prices also found some support after the Keystone Pipeline declared force majeure on scheduled oil shipments,” said ANZ Research analysts on Thursday, noting though there were downside risks on signs of surging supply from OPEC members.

The Keystone oil pipeline from Canada to the United States remained shut on Wednesday following an oil spill near Fort Ransom, North Dakota, while plans to return it to service were being evaluated, its operator South Bow (SOBO.TO), opens new tab said.

Elsewhere, the Caspian Pipeline Consortium resumed loading oil at one of two previously shut Black Sea moorings, it said on Wednesday, after a court lifted restrictions put on the Western-backed group’s facility by a Russian regulator.

In the United States, crude inventories rose by 2.6 million barrels in the week to April 4, the Energy Information Administration said, nearly double the expectations in a Reuters poll for a 1.4-million-barrel rise.