Crude oil depreciated when the US imposed Chinese taxes

In the afternoon of 4/2, Brent crude oil price decreased by 1.2% to 75 USD per barrel. Meanwhile, US crude oil Lower 2%, to 71.7 USD.

The market went down after the US imposed an additional 10% import tax to all Chinese goods took effect on February 4. This caused Beijing to immediately retaliate with a 15% tax with coal and liquefied gas (LNG). US crude oil is subject to 10%tax, starting from 10/2.

“China’s move can be considered as a tension escalation signal, reducing the possibility of temporary solutions such as the US with Mexico and Canada. That makes the oil price go down, “Yeap Jun Rong – a market strategist at IG Markets said.

China is the largest energy importer in the world, but they buy very little from the US. US crude oil only accounted for 1.7% of the country’s total fuel import last year.

“Import tax will affect the WTI flow into China, because it makes this oil more expensive than alternative options such as CPC oil of Kazakhstan or Murban (Abu Dhabi),” “, June Goh – analyst analyst. At Sparta Commodities said. However, he said that the tax will not have a big impact on the WTI price, because this item can choose another destination easily.

Earlier, on February 1, President Trump signed an order to impose a tax on Mexico, Canada and China. Accordingly, energy imported from Canada will be imposed on 10%tax, while this item from Mexico is still subject to 25%tax. Other items from Mexico and Canada were subject to 25% tax and all Chinese goods were added an additional 10%, from 0h01 on February 4.

However, one day before this order takes effect, Mr. Trump announced a tax postponement with Mexico and Canada for another month. The reason is that the US has reached an agreement to tighten smuggling and immigration activities with these two countries. And taxes with China will still take effect.