Oil Prices Dip as China Inflation Weakens, Trade War Escalates

Oil prices declined in Asian trading Thursday following weak inflation data from China and rising tensions in the U.S.-China trade war. Brent crude futures for June delivery fell 1.1% to $64.79 per barrel, while West Texas Intermediate dropped 1% to $61.24. This followed a 4%–6% surge on Wednesday as markets briefly rebounded from a four-year low after U.S. President Donald Trump delayed some global tariffs.

However, investor sentiment remained fragile. Trump escalated the trade conflict by raising tariffs on Chinese imports to 125%, prompting swift retaliation from Beijing. The growing rift between the world’s two largest economies raised fears of slower global economic growth and weakening oil demand.

Adding to bearish pressure, U.S. crude inventories saw a larger-than-expected increase, suggesting strong supply levels. However, a significant draw in distillates hinted at underlying demand resilience.

China’s latest economic data added to concerns. March’s consumer price index fell short of expectations, while producer price index inflation declined for the 30th consecutive month, reflecting continued economic headwinds. The ongoing trade war has already curbed China’s oil imports, which have trended downward over the past year amid sluggish growth.

In a partial effort to ease tensions, Trump announced a 90-day delay in imposing reciprocal tariffs, allowing more time for trade negotiations. Still, a new 10% universal tariff on all U.S. imports and a 25% duty on auto imports remain in effect. While the move momentarily reduced recession fears, the broader trade conflict threatens global oil demand.

With ongoing uncertainty, oil markets remain volatile, influenced by trade dynamics, economic indicators, and supply-demand imbalances. Investors continue to monitor developments closely, especially as energy markets react to shifting geopolitical and macroeconomic signals.