Oil Falls As Frustration Mounts Over U.S./China Tariff Talks

Traders are also uncertain about the success of the nuclear talks with Iran: File Image/Pixabay

Following the previous session that saw gains based on traders' perceptions that the trade war between the U.S. and China was cooling, oil on Monday fell over 1 percent as sentiment apparently reversed gears and demand concerns returned.

Brent settled down $1.01, or 1.5 percent, at $65.86 per barrel, and West Texas Intermediate settled down 97 cents, also 1.5 percent, at $62.05 per barrel.

The concern regarding geopolitics was centered perceptions of how the U.S. and China were behaving.

Gary Cunningham, director of market research for Tradition Energy, said, "This wait-and-see attitude coming out of the U.S.-China talks is leaving a bad taste in peoples' mouths….if the talks go bad, you could see a drop in demand for oil from China."

The same uncertainty involved the U.S.'s relations with other countries too: Phil Flynn, senior market analyst at Price Futures Group Inc., noted that "A lot of the feeling in the market is how is it going to be playing out in the next 24 to 48 hours…are we going to be bombing Iran? Is China going to be buying more crude?"

Abbas Araqchi, foreign minister to Iran, contributed to the market's state of apprehension by telling media he was "extremely cautious" about the success of the negotiations between Tehran and Washington, as talks were set to continue in Oman this week.

In other oil news on Monday, China's crude inventories in March rose by 1.74 million barrels daily to the highest level in almost three years, suggesting problems with demand growth; also, Iranian oil imports into China that month reached 1.71 million barrels daily according to Kpler, the highest Iranian oil import rate since last November.

Also on Monday, U.S. president Donald Trump's tariffs against Canada (the world's fourth largest crude producer) have reportedly caused drillers in Alberta to shift focus to gas extraction.

Alberta Energy Regulator data showed that the number of new gas wells issued in the first quarter rose 26 percent from the previous quarter to 308, the highest quarterly total in two years, while the number of oil wells fell 24 percent to 293, the lowest since 2021.