On world markets, oil prices fell last week as well, for the second time in a row, by around 3 percent, which is a consequence of the intensifying trade war between the US and China, OPEC’s announcement of an increase in production and the cease-fire in Gaza.
The price of a barrel on the London market fell last week by 2.8 percent, to $62.73, while on the American market, the price of a barrel decreased by 3.2 percent, to $58.90. These are their lowest levels since May.
Prices fell the most on Friday, after US President Donald Trump said that starting November 1, he will introduce additional 100 percent tariffs on the import of Chinese products, as well as restrictions on the export of all strategic software to China.
Trump said that in this way he was reacting to China’s extremely aggressive trade stance and that there was no longer a reason for the meeting with Chinese President Xi Jinping, which was supposed to take place in two weeks.
Trump’s messages came after China announced tighter controls on rare earth exports, and Beijing’s move came after some US politicians called for an extension of the ban on chip exports to China.
The escalation of the US-China trade war could slow global economic growth and, consequently, demand for energy.
Oil prices also fell as tensions in the Middle East eased. Representatives of Hamas and Israel signed a ceasefire agreement on Thursday, under which Hamas would release long-held hostages, while Israeli forces would withdraw from Gaza and allow aid convoys to enter.
The cessation of the conflict could mark the beginning of normalization of traffic, including the passage of tankers through the Red Sea and the Suez Canal.
In addition, the Organization of the Petroleum Exporting Countries (OPEC) and its allies recently decided to increase production by 137,000 barrels per day in November, as they did in October.
“A number of factors have caused the decline in oil prices, with Trump’s announcement of large tariffs on Chinese imports being just the latest in a series. There are also increased OPEC production, increased production in North and South America, reduced geopolitical risks following the Gaza ceasefire agreement…” explains Andrew Lipov, president of Lipov Oil Associations.
