Oil prices dropped on Wednesday, April 23, following reports that the White House is considering major cuts to tariffs on Chinese imports. This potential shift could significantly impact global trade and the energy market.
By 1:46 p.m. ET, Brent crude had fallen by 2.73%, trading at $65.60. U.S. West Texas Intermediate (WTI) crude was down 2.0%, at $68.37, hitting its lowest level in four years after peaking at $81 in January.
According to Reuters, the Trump administration is reportedly weighing a reduction in tariffs on Chinese goods from the current 145% to between 50% and 65%. The change would depend on the outcome of ongoing negotiations with Beijing. Although President Trump expressed hope for a deal, he did not provide further details.
Analysts believe that easing trade tensions between the U.S. and China could stimulate global economic growth and increase demand for oil. However, market reactions were negative, with concerns over supply issues and uncertainty about the timing of any trade agreement.
The U.S. and China together account for around 40% of global oil demand, and any slowdown in their economies could sharply reduce this demand. Oil prices are also under pressure from a weaker economy and rising oil supply, particularly after eight OPEC+ countries began to gradually unwind voluntary production cuts on April 1.
Additionally, sources told Reuters that OPEC+ may accelerate its output increases in June, following higher-than-expected production hikes in May. This comes amid concerns about OPEC+ countries’ compliance with production quotas.
Market participants are closely watching U.S.-China trade talks and OPEC+ decisions, both of which could significantly influence oil prices in the near future.
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