Oil Prices Edge Higher Despite Tariff Concerns and Weak Chinese Demand

Oil prices rose in Asian trading on Monday after three straight weeks of declines, despite U.S. President Donald Trump’s new tariff measures on steel and aluminum imports.

• Brent crude: Up 0.5% to $75.06 per barrel
• WTI crude (March contract): Up 0.6% to $71.13 per barrel

Key Drivers:

1. Tariffs and Trade Tensions
   • The U.S. imposed a 10% tariff on Chinese imports, triggering retaliatory tariffs from China on U.S. oil, LNG, and coal.
   • The U.S. also slapped a 25% tariff on all steel and aluminum imports, raising costs for energy infrastructure.
   • These trade measures have introduced uncertainty into the global oil market, potentially tightening supply.
2. Inflation Concerns & Oil as a Hedge
   • Higher import costs due to tariffs could fuel inflation, pushing investors toward commodities like oil as a hedge, supporting prices.
3. Weak Demand Signals from China
   • China’s January inflation data showed sluggish consumer spending and industrial activity, adding downward pressure on oil prices.
   • The Producer Price Index (PPI) decline reflects ongoing deflation in the manufacturing sector, which could weigh on industrial oil demand.
   • Potential stimulus measures from Beijing, such as interest rate cuts or infrastructure spending, could provide future support to oil prices.

While short-term volatility continues, geopolitical risks, trade policies, and economic data from China remain critical factors shaping the oil market outlook.