FACTBOX: US-China trade tensions, supply glut fears weigh on crude markets

Oil markets faced renewed pressure April 10 as escalating US-China trade tensions and concerns over supply glut overshadowed initial optimism from US President Donald Trump's tariff pause announcement, impacting global crude flows and pricing dynamics.

Trump paused country-specific "reciprocal tariffs" on April 9, less than a day after they went live while leaving a broad 10% tariff in place and ratcheting up duties on China. Trump raised the tariff for China to 125% effective immediately, from the previously announced 104% tariff that started April 9. China responded to the US tariffs with an 84% import duty set to go live April 10.

"The bearish sentiment surrounding oil prices is focused on concerns for the global economy," oil analysts at S&P Global Commodity Insights said in a note. "But individual oil products are also specifically challenged. China's high stake in US LPG and ethane exports is at risk."

The following are key facts about the current market situation:

Prices

Oil futures retreated from earlier gains as the market outlook shifted back to an expected supply glut for 2025/26.

• ICE June Brent crude futures fell 2.3% day over day to $63.99/b in late Asian trading while NYMEX May light sweet crude dropped 2.1% to $61.05/b. Brent futures contract had settled at $65.48/b, up $2.66 day over day after rebounding from an intraday low of $58.40/b.
• Oil prices have declined approximately $13/b since the April 2 tariff announcement, reflecting growing economic growth concerns.
• The forward curve structure indicates growing supply availability with the December 2025-2026 spread moving into contango.
• Platts, part of S&P Global Commodity Insights, assessed June Dubai swap at $64.63/b, showing a significant gain of $3.98/b (6.56%) from the previous close.
• The Brent-Dubai exchange of futures for swaps spread widened to 29 cents/b, indicating changing regional price dynamics

Trade flows

Global crude trade patterns face disruption amid heightened US-China tensions and shifting demand dynamics.

• China's crude oil imports face potential disruption as Beijing responds to US tariffs with an 84% levy on US goods, threatening the world's largest crude-importing nation's consumption patterns.
• US LPG exports to China, representing over 50% of Chinese LPG imports primarily used for propane dehydrogenation feedstocks, face significant challenges under the new tariff regime.
• Nearly 100% of China's ethane imports sourced from the US are at risk, with potential cancellations of May cargo liftings being discussed in the market.
• Middle Eastern LPG suppliers could see increased demand as Chinese buyers seek alternatives to US-origin products affected by tariffs.
• Asian naphtha markets may receive modest support if Chinese petrochemical producers switch to alternative feedstocks, though flexibility is limited.

Infrastructure

US storage levels have risen while OPEC prepares for production increases.

• US crude oil inventories increased 2.55 million barrels to 442.35 million barrels in the week ended April 4, reaching the highest level since July 2024.
• OPEC plans to increase production by 411,000 b/d in May, triple the increase for April, adding to oversupply concerns.
• Chinese petrochemical facilities face operational decisions as feedstock economics shift under new tariff structures.