Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on June 3, 2019

KUALA LUMPUR: Crude oil tumbled further last week as the outlook for energy demand growth dims amid escalating global trade tensions.

Last Friday, Brent crude oil for July settlement sank US$2.38 to US$64.49 (RM270.21) a barrel, while the West Texas Intermediate crude for July retreated 5.46% to US$53.50 a barrel.

Oil prices tank following US President Donald Trump’s threat of new tariffs against its southern neighbour, Mexico, to force the latter to take harsher measures to curb illegal immigration. Mexico is one of US’ largest trade partners and a major supplier of crude oil.

Last Thursday, Trump vowed to hike tariffs unless Mexico stopped people from illegally entering the US. They plan to impose a 5% tariff on Mexican imports starting from June 10, and will increase monthly, up to 25%, on Oct 1, Reuters reported.

US refiners import about 680,000 barrels of Mexican crude per day, the newswire wrote, citing analysts, and the 5% tariff will add an extra US$2 million to the cost of their daily purchases.

While Mexico has so far not said anything about retaliation, the threat has exacerbated concerns over global economic growth, which has come under pressure from the tit-for-tat trade war between the US and China.

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