Oil prices fell slightly in Asian trade on Monday as reports emerged that Chinese media had uncovered a major oil reserve in the South China Sea. This news has helped ease concerns over tightening supplies and a slowing global economy amid escalating U.S. tariff threats.
Key Drivers Behind the Price Drop
Reserve Discovery:The China National Offshore Oil Corporation reportedly found a massive oil field, suggesting that long-term supplies may increase despite current market pressures.
Tariff Concerns:U.S. President Donald Trump has threatened to impose further sanctions and reciprocal tariffs—not only targeting Russia but also Iran—raising fears of a global economic slowdown and supply disruptions. This added to the volatility after three consecutive weeks of rising oil prices driven by sanctions fears.
Mixed Demand Signals:Positive economic data from China, such as a better-than-expected purchasing managers’ index, helped limit the decline by indicating that demand might remain resilient despite tariff pressures.
Market Movements
Brent Crude:May-expiring Brent oil futures dipped 0.2% to $73.52 a barrel.
West Texas Intermediate (WTI):WTI crude futures also fell 0.2%, trading at $68.74 a barrel by 21:57 ET (01:57 GMT).
Broader Implications
Trump’s recent threats—ranging from additional sanctions on Russian oil buyers to potential military actions against Iran—have kept the market on edge. However, the discovery of new reserves in the South China Sea introduces a counterbalance to fears of a supply crunch.
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