February 5 (Reuters) – Despite U.S. President Donald Trump’s intensified push to stop Iranian crude shipments, oil prices fell more than 1% on Wednesday as growing U.S. stocks and worries of a fresh Sino-U.S. trade war fueled fears of sluggish economic growth.
At 1210 GMT, Brent crude futures were trading at $75.28 a barrel, down 92 cents, or 1.21%. At $71.84, U.S. West Texas Intermediate crude (WTI) fell 86 cents, or 1.18%.
Following China’s announcement of duties on U.S. imports of coal, oil, and liquefied natural gas in retaliation for U.S. taxes on Chinese exports, oil prices fluctuated on Tuesday, with WTI dropping by 3% at one point to its lowest level since December 31.
However, after Trump reinstated the “maximum pressure” campaign against Iran to reduce its nuclear program, which he had implemented during his first term and which reduced Iranian crude exports to nearly zero, prices rose again.
Oil prices may decline as a result of ongoing trade tensions between the United States and China.
“Global economy and the rise in oil consumption are negatively impacted by Trump’s tariff upheaval and trade war. According to Bjarne Schieldrop, chief commodities analyst at SEB, “business investments and consumer spending will likely fall in the face of these highly erratic and growth-negative actions.”
“The oil market is now caught between increasing fears that an escalating trade war will damage global oil demand growth on the one hand and possible sudden disruption of Iranian oil export,” he stated.
According to Iran’s oil minister’s SHANA news channel, unilateral sanctions against petroleum producers would cause energy markets to become unstable.
According to estimates from the U.S. Energy Information Administration, Tehran’s oil exports generated $53 billion in 2023 and $54 billion the year before. According to OPEC data, output in 2024 was at its highest level since 2018.
After reimposing sanctions, Trump drove Iran’s oil exports to almost zero for a portion of his first term.
The consequent supply crunch, “should these sanctions be re-imposed, could sustain the upward momentum in oil prices, particularly amid slower than expected supply adjustments from OPEC+ producers,” stated Ahmad Assiri, Pepperstone’s research strategist.
Higher U.S. crude inventory data from the previous day also placed pressure on petroleum prices on Wednesday.
Growing crude and fuel inventories in the world’s largest oil consumer indicate a decline in consumption, which heightens concerns about how tariffs may affect the outlook for the global economy and energy demand.
According to market sources, which cited data from the American Petroleum Institute, crude stockpiles increased by 5.03 million barrels in the week ending January 31.
According to the sources, the API indicated that distillate supplies decreased by 6.98 million barrels while gasoline inventories increased by 5.43 million barrels.
On Wednesday at 1530 GMT, official U.S. government oil inventory data is scheduled to be made public.
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