The The slump in oil prices according to the twin shocks of the tariffs of President Donald Trump and the surprising increase in production through the organization of the Petroleum Exporting countries and allies (Opec+) has changed the global energy landscape at breathtaking speed.
Brent Crude, the global benchmark, fell by 13 percent by Thursday (April 3) and on Friday to a little more than 66 US dollars per barrel, which occupied new doubts about Trump's striving to increase the US fossil output aggressively and to achieve “energy dominance”. The sell -off via the Atlantic is ready to facilitate the increasing energy costs in Europe, but also to squeeze petrostacts from the Middle East.
The oil market already throws the expectations of 2025 aside. Goldman Sachs, one of the long-time raw bulls of Wall Street, reduced his prediction of the end of the year for Brent Rohs by $ 5 to $ 66 per barrel. Enverus has reduced more than a third from his demand model. UBS, which predicts at the beginning of the year that global demand would grow by 1.1 million barrels per day, is now reducing almost 50 percent.
“At the moment when President Trump, almost two months ago, the tariffs that were hammering on Canada, we have already downgraded our forecast,” said Al Salazar, head of macro oil and gas research at Enverus. “The timing of the Opec announcement felt as if it were put on.”
On Friday near 61 US dollars per barrel, the US oil futures settled well below the threshold of 65 US dollars, which many companies profitably drill in Texas and the surrounding states, as can be seen from a recently formed by the Federal Reserve Bank of Dallas. The trade war increases the price of drilling devices, with the pipe costs increase compared to the level before Trump imposed on the steel 25 percent of tariffs last month.
The combination of lower oil prices and higher costs threatened Trump's push for US drills to increase production.
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“I don't think” Drill, Baby, Drill “has ever been a short-term reality for US producers,” said Leo Mariani, analyst at Roth Capital Partners, in a telephone interview on Friday. “Now it's not even a consideration.”
The S&P 500 Energy Index, which consisted of US oil and gas companies, plunged by 16 percent on Thursday and Friday. The largest decliners included APA, Diamondback Energy and Baker Hughes, all of which fell by more than 20 percent.
Finally, lower oil prices will reduce gasoline prices, which would help to achieve Trump's goal of reducing the energy costs of the United States.
In Europe, the price storms are welcome news. The tariffs sent a gas there, which fell into a six -month low of expectations that trade wars could cripple the global energy requirements and relieve the latest tightness of the market.
These lower prices give a region that fights for the next winter to store enough gas. When China's economy slows down, Europe is less likely to suspend the purchase of liquid gas goods from the USA and elsewhere.
A country that can be seen is Germany that needs most of the gasoline in summer to fill its huge storage locations. Lower gas prices can help its sick industries that have already been struggling since the Russia's war in Ukraine has increased energy prices.
In the Middle East, the pain that some Opec+ members are exposed to from lower prices is in the design.
Saudi Arabia urged the previously planned increase in production that was planned for May to punish some members of the group – including Kazakhstan and Iraq – who stubbornly beat their starting rates.
The time of the announcement – hours after Trumps – it seemed unlikely that he was a coincidence. Officials in Washington and Riad had discussions in the days before, according to a person who was familiar with the matter who asked not to be identified. Group -lented and rough dealers speculated that the Saudis deliberately wanted to maximize the bear.
It is a risky gambling for Opec+. Many of its members need high oil prices to cover government expenses. Saudi -Arabia, for example, needs oil over 90 US dollars per barrel, according to the International Monetary Fund, and was already forced to scale investments in some of the projects in the heart of Crown Prince Mohammed bin Salman's vision to change the economy of the kingdom.
Iraq also needs prices over 90 US dollars per barrel, while Kazakhstan needs more than 115 US dollars per barrel, as the IMF estimates.
Back in the United States, slate inventors prompted itself to settle into a hard, new reality.
“You almost have the feeling that this change from Opec was the additional driver to make people say:” Ok, now I really have to think about a price of sub-us dollar, “said Josh Silverstein, UBS analyst, in an interview. Bloomberg