The market of oil chained a strong decline after Donald Trump raised new tariffs on China, a move that rekindles the specter of a trade war and hits global growth expectations.
Investors digest at the same time tightening of Chinese export controls on rare earths and the escalation of the commercial war, with threats ranging from higher taxes to possible restrictions on software considered critical.
Crude oil markets: the size of the drop
In a session marked by the risk aversion’s most emblematic landmarks, the Brent fell 3,88% to $62,69, Whereas the West Texas Intermediate It fell by 4,37% and ended in 58,81 US $, reflecting concerns about weaker demand if the trade shock intensifies.
The selling pressure responded, above all, to the fear that new trade barriers slow economic activity, reduce energy consumption and aggravate imbalances between supply and demand.
What Trump announced and why it is putting pressure on the market
The US president stated that he is considering an additional 100% tariff on Chinese imports and export controls on sensitive software from November 1st. With this, the total tax burden on numerous products could climb to around 130%, down from the 145% applied at the previous peak before the last truce.
Trump also suggests that sees no reason to meet with Xi Jinping on the sidelines of the APEC summit scheduled for Gyeongju, and attributes his stance to the cascade of measures that Beijing is activating on the trade and technological fronts.
China tightens the rare earths game
On the Chinese side, the Government has expanded controls on the export of rare earths and equipment and technologies linked to its processing, invoking national security reasons. Added to this are new port fees on US vessels and an antitrust investigation into Qualcomm, fueling fears of bottlenecks in critical supply chains such as semiconductors, electric motors or aeronautical components.
Other headwinds for the price
In parallel, the easing of tensions in the Middle East Following progress on the first phase of a peace plan for Gaza, the risk of supply disruptions has decreased, a factor that typically reduces the geopolitical premium on crude oil, according to market strategists.
On the fundamentals front, the latest official report in the US reflected a increase of 3,7 million barrels in commercial reserves Crude oil prices. The drop in gasoline and distillates could mitigate some of the impact, but the immediate balance is in favor potentially lower prices.
Regarding supply, OPEC+ raised its November production less than expected, which helped to avoid a bigger price bleed; however, the non-OPEC+ production growth prospects point to global inventories on the rise until 2026, a bearish backdrop for crude oil.
Contagion effect on stock markets and other raw materials
The protectionist turn had an immediate echo in the markets and in the bag: The S&P 500 fell more than 1,5% and the Nasdaq 100 fell as much as 2,4%, while in Chicago the Soybean futures fell 1,9% up to US$10,0275 per bushel, reflecting greater doubts about bilateral agricultural trade.
What the market will look at in the short term
With volatility on the rise, traders will focus on political signals and supply-demand data that can change the short-term price bias.
- Definition of the schedule and scope of the new US tariffs, and possible countermeasures from Beijing.
- Confirmation of whether there will be meeting between Trump and Xi in APEC or breakdown of the dialogue channel.
- Upcoming weekly EIA inventories in the US and product demand readings.
- OPEC+ signals on future supply and fulfillment, as well as the evolution of tensions in the Middle East.
The combination of tariff threats, Chinese controls on rare earths and a backdrop of increased supply and lower geopolitical risks explains the crude oil crashUntil the direction of trade policy is clarified and supply flows are confirmed, the oil market could continue to be driven by headlines.
