Crude oil is staring down its eighth consecutive weekly drop—the longest losing streak since 2015—as former President Donald Trump’s aggressive trade policies cast a shadow over global demand. Coupled with the looming threat of a renewed influx of Russian barrels into an already saturated market, oil traders face turbulent waters ahead.
Despite a modest rebound lifting West Texas Intermediate slightly above $66 a barrel and Brent crude near $70, the underlying narrative remains grim. Trump’s tariff-heavy policies have not just rattled equity markets; they’ve fundamentally dampened expectations for global economic growth, directly impacting projected oil consumption.
Rebecca Babin, senior energy trader at CIBC Private Wealth Group, highlighted the market’s cautious stance towards geopolitical headlines, suggesting sanctions remain “all just words until they’re enforced.” The muted reaction to recent sanctions on Iran’s oil sector and Russian energy payments underscores traders’ skepticism.
More concerning is the International Energy Agency’s warning of a looming oversupply crisis, exacerbated by weakening demand amid escalating trade tensions and OPEC+’s continuing output growth. Trump’s recent suggestion via Truth Social that the Russia-Ukraine conflict may soon conclude only intensifies fears that a rush of Russian crude could soon hit markets already bracing for surplus.
The Biden administration’s outgoing sanctions against Russia’s oil exports have indeed disrupted trade logistics, significantly lengthening shipping times and slashing Russian oil revenues—a crucial funding source for Moscow’s war efforts. Yet, should these sanctions ease amid geopolitical shifts, a surge of Russian barrels would quickly undermine oil prices further, deepening existing bearish sentiment.
In essence, the crude market currently stands at a precarious intersection of weakened global economic confidence and potential supply glut. Unless there’s a decisive shift in trade policy or significant geopolitical upheaval, oil prices are likely to remain under considerable downward pressure.
As investors weigh these troubling dynamics, caution seems wise. This extended decline may not simply be a temporary pullback but rather the prelude to a challenging period for the global energy market.
[Original information sourced from Bloomberg and market commentary.]
