Crude oil prices crashed further on Wednesday as Brent fell to $60 per barrel down from about $63 on Tuesday.
According to Reuters, Brent futures were down $2.36, or 3.76 per cent, to $60.46 a barrel at United States West Texas Intermediate crude futures were down $2.37, or 3.98 per cent, at $57.21.
The PUNCH reports that aside from threatening the 2025 budget, the crash will also hit deep into the projected margins of both international and indigenous oil companies, especially with Nigeria’s high production cost.
The trade war between US President Donald Trump and China is fuelling speculations of a recession.
China announced additional tariffs on US goods in retaliation against Trump’s tariff policy.
China said it will impose 84 per cent tariffs on US goods from Thursday, up from the previously announced 34 per cent, according to the finance ministry.
The escalating trade war between China and the US is stoking fears of a global recession, UBS analyst Giovanni Staunovo told Reuters.
“While oil demand has likely not suffered yet, rising concerns of weaker oil demand over the coming months require lower prices to trigger supply adjustments to prevent an oversupplied market,” Staunovo added.
Meanwhile, countries in the European Union agreed on Wednesday to impose 25 per cent tariffs on a range of US imports in a first round of countermeasures, adding to China’s and Canada’s retaliatory measures.
“China’s aggressive retaliation diminishes the chances of a quick deal between the world’s two biggest economies, triggering mounting fears of economic recession across the globe,” said Ye Lin, vice president of oil commodity markets at Rystad Energy.
“China’s 50,000 barrels per day to 100,000 bpd of oil demand growth is at risk if the trade war continues for longer. However, a stronger stimulus to boost domestic consumption could mitigate the losses,” Ye Lin was quoted.
Brent and WTI have fallen for five sessions since Trump announced sweeping tariffs on most imports, prompting concerns over economic growth and demand for fuel.
“Some US analysts suggested that the White House wants to drive oil prices closer to $50 as the administration believes that the US oil and gas industry can survive a period of disruption,” said Panmure Liberum analyst, Ashley Kelty.
Meanwhile, Trump said yesterday that he had authorised a 90-day pause on many of his reciprocal and 10 per cent tariffs, effective immediately, even as he raised them on China.
Trump declared a 90-day pause on reciprocal and 10 per cent tariffs that he had unveiled initially last week while raising duties on China.
Trump’s unveiling of sweeping tariffs late last Wednesday had rattled markets, with stocks selling off sharply in the days following the announcement.
