(Bloomberg) -- Global benchmark Brent crude dropped below $70 a barrel for the first time since October as US President Donald Trump’s tariffs kick off a series of trade wars and OPEC+ works to revive production that has been halted for years.
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Trump delivered on his threat to hit Canada and Mexico with sweeping import levies and doubled an existing charge on China, sparking swift reprisals that threaten to reduce global economic growth and damp energy demand. The moves come a day after OPEC+ said it would increase output after repeated delays, a decision that surprised a market already weighed down by expectations for a surplus later this year.
The turmoil is accentuating a bearish posture in the market, with oil traders paying the biggest premiums for put options in five months. Brent slid more than 2%, while US benchmark West Texas Intermediate tumbled to around $67 a barrel.
“The OPEC+ announcement from yesterday to increase output coupled with the US tariffs on Mexican, Canadian and Chinese imports raise the prospects of an oversupplied market where economic growth and oil demand also suffer,” brokerage PVM wrote in a report.
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