Trump’s Tariff Pause Boost Oil Prices

Brent crude oil prices are down by 1.6% this week to $65.38 per barrel, but despite the negative result, prices have shown a strong rebound from the midweek low of $58.68—the weakest level since February 2021. This extreme volatility has been fuelled by U.S. President Donald Trump’s aggressive tariff campaign, which began on April 2 with sweeping duties on imports from 185 countries. Brent promptly slid to the $68.00–70.00 range on the news.

Trump specifically targeted China with 34% tariffs, effective from April 9. Beijing responded with identical levies on all U.S. imports, dragging Brent further down to $66.30 per barrel by the end of last week. As tensions escalated, Trump issued an ultimatum to China demanding a rollback of tariffs, which was ignored. In response, he raised tariffs to 104%, prompting China to hike its own to 84%. Ultimately, Trump responded again with a further increase to 125%.

However, in a surprising turn, Trump made a concession by reducing tariffs to a flat 10% for at least 75 countries that requested negotiations. This 90-day pause signals a potential softening of his stance. Though U.S.-China relations remain at a deadlock, this round appears to have been won by Beijing, at least temporarily. China may now wait for a White House outreach or initiate the next step itself.

Large investors seemed to have anticipated such a shift. They sold United States Oil Fund (USO) shares worth $48.11 million last week and reinvested $180 million on Monday, buying at an average Brent price of $64.00 per barrel. Although this position has only yielded a minor profit so far, investors are likely aiming for more. With Trump’s tariff pause in effect, Brent prices below $70.00 now appear heavily oversold. Prospects of resumed U.S.–China trade negotiations could push Brent back toward $75.00, although any recovery is unlikely to be smooth, especially with OPEC+ increasing output and exerting downward pressure on prices.

Nonetheless, oil prices are expected to hold above the key support zone at $58.00–60.00 over the next 90 days. A rebound toward the resistance at $68.00–70.00 remains the baseline scenario, amid short-term volatility.

This outlook could be further reinforced by declining U.S. inflation and ongoing nuclear deal talks between the U.S. and Iran, set for this Saturday. Trump has intensified his rhetoric, threatening military action and likely additional pressure on Tehran. While Iran appears open to negotiations, it demands fair and acceptable terms. A breakdown in talks could trigger the reimposition of sanctions and a potential blockade of the Strait of Hormuz—both of which could send oil prices sharply higher.