- The Oil price slides sharply amid fears of Trump tariffs on China.
- US President Trump is expected to slap 10% additional tariffs on China on March 4.
- European leaders, including Zelenskyy, have agreed to structure Ukraine peace plan.
West Texas Intermediate (WTI), futures on NYMEX, tumbles to near $69.00 in European trading hours on Monday. The Oil price faces strong selling pressure as investors are cautious amid fears that United States (US) President Donald Trump will impose additional 10% tariffs on China for pouring drugs through Canadian and Mexican borders into their economy on March 4.
US President Trump had already slapped the same level of tariffs in the first week of February. More levies on China by the US would diminish the competitiveness of Chinese products in the global economy. Such a scenario would weaken demand for Chinese products, which will weigh on the Oil price, given that China is the largest importer of Oil in the world.
Meanwhile, Caixin Manufacturing Purchasing Managers’ Index (PMI) data for February has come in better than expected. The Manufacturing PMI, which gauges activities in the manufacturing sector, rose at a faster pace to 50.8, from the estimates of 50.3 and 50.1 seen in January. Technically, upbeat Caixin Manufacturing PMI indicates strong demand for Oil and boosts its price. However, investors are weighing more on the Chinese economic outlook.
Apart from Trump’s tariff fears, growing optimism over peace between Russia and Ukraine has also weighed on the Oil price. Over the weekend, United Kingdom (UK) Prime Minister Kier Starmer confirmed that European leaders, including Ukrainian President Volodymyr Zelenskyy, have agreed to structure a peace plan for ending the war in Ukraine, which entered its fourth year in February.
Investors expect a truce between Russia and Ukraine will be followed by Europe and the US revoking sanctions on Russia. Such a scenario would allow Russia to infuse Oil into the global market. An increase in seaborne Oil flows will weaken its price.
