Elementary My Dear Watson! Is a Trade War Brewing and What Does It Mean for Oil Prices?!

The Game is Afoot: Tariffs and Turmoil

The crude oil market my dear readers has been exhibiting behavior most peculiar. As I observed U.S. crude oil perked up a paltry 24 cents a mere 0.4% to settle at $60.94 per barrel. Brent not to be outdone in its tepid display rose 18 cents or 0.28% to $64.39 per barrel. But let us not be deceived by these minor fluctuations. The shadow of a trade war looms large cast by none other than President Trump and his penchant for tariffs. It seems the game as they say is afoot and the scent of financial disruption is unmistakable.

A Four Year Low: The Sub $60 Mystery

Monday saw West Texas Intermediate or WTI as the Americans call it plummet to a session low of $58.95 per barrel. A low not seen in four years Watson! Four years! This mark you is no trifling matter. 'Data! Data! Data!' I can hear myself exclaim. 'I can’t make bricks without clay!' And the clay in this instance is the palpable fear gripping the market – fear of a full blown global trade war. The game it seems is becoming ever more perilous. One begins to suspect foul play...

The Trump Card: A Tariff Tsunami

Since Trump's tariff announcement last Wednesday U.S. crude has sunk faster than a lead weight in the Thames shedding over 14% of its value. Brent not to be outdone has followed suit with a dip of over 13%. Clearly something is rotten in the state of the oil market. The President’s actions are a veritable tidal wave crashing against the shores of economic stability. The effects on crude oil have been immediate and undeniable. “It has long been an axiom of mine that the little things are infinitely the most important.” The small daily fluctuations when viewed as a whole speak to a larger more unsettling trend.

Beijing's Bluff? A Pair of Twos You Say?

China never one to back down from a challenge has vowed to contest Trump's tariffs with the tenacity of a bulldog. Retaliatory tariffs of 34% on U.S. goods are set to commence on April 10th. Trump in his characteristic fashion has countered with threats of further levies – a staggering 50% increase on Chinese goods should Beijing persist. Treasury Secretary Scott Bessent in a rather colorful analogy suggested that China is 'playing with a pair of twos.' He postulates that the U.S. has far less to lose in this tariff tit for tat. 'You know my method. It is founded upon the observation of trifles.' Bessent's comment though seemingly minor reveals a deeper strategic assessment of the situation.

The Losing Hand: Who Blinks First?

According to Bessent the U.S. exports a mere one fifth of what China exports to them. Thus in his estimation the Chinese stand to lose more in this economic skirmish. However I urge caution. The game is far from over and the cards are still being dealt. It is a dangerous game when trade becomes no more than a poker match.

Elementary My Dear Investors: Proceed with Caution

The crude oil market finds itself caught between the Scylla of U.S. tariffs and the Charybdis of Chinese retaliation. While the minor gains observed today offer a fleeting respite the underlying tension remains palpable. Investors I implore you proceed with caution. As I have often said “The world is full of obvious things which nobody by any chance ever observes.” Observe the movements of these global powers analyze the data and above all trust your own deductions. The game as always is afoot and only the most astute will emerge victorious.