President Trump’s threat of more tariffs on China shook up markets on Thursday, and oil prices were no exception.
West Texas Intermediate Crude (CL=F) saw its steepest drop in four years following the president’s tweets saying the administration would impose an additional 10% tariff on $300 billion in Chinese goods, set to go into effect in September. The U.S. and China have been locked in a trade war since last year, with recent talks in Shanghai between officials from both countries not yielding much.
Stratas Advisors’ senior oil market analyst Ashley Petersen told Yahoo Finance that the president’s latest tariff threat, coupled with consumer demand concerns, is putting pressure on oil prices, likely to last for at least another month.
“We got these additional tariffs, and that’s really driven down prices,” Petersen said. “It’s going to hurt for the rest of the summer, trying to claw our way back from these concerns about consumer demand.”
While Chevron (CVX) and Exxon (XOM) earnings proved to be “a bit of a bright spot” for the industry, Petersen said any expectations of oil prices are hard to pin down because of these tariffs.
WTI Crude was trading at $55.64 a barrel on Friday afternoon, and is down for the week.
“I had [a year-end target] up until yesterday afternoon,” she said. “Now, it’s definitely worth reevaluating. Prices are going to be range-bound through the end of the summer, and it’s because we were already in doldrums.”
Now, Petersen explained, the priority will be waiting to see how China responds.
“China’s playing a waiting game,” she said. “It looks like they’re going to move slow in the hopes of outlasting the current president.”
Katie is an associate editor for Yahoo Finance. Follow her on Twitter.
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