NEW YORK: Oil prices plunged on Friday to the lowest level since 2021 and commodities including natural gas and soybeans also dived as China retaliated against US President Donald Trump's aggressive tariffs.
Beijing put forward a 34 per cent additional levy on all US goods, hitting back after Trump announced a 10 per cent minimum tariff on most US imports, with significantly higher duties for dozens of countries including China.
"This is the first very explicit escalation from China, they are not backing down, they are upping the game," said Bjarne Schieldrop, chief commodities analyst at SEB. He is expecting further retaliation from Trump.
The accelerating tensions further drove fears that the tariffs could lead to a global trade war, weighing on economic growth and curbing demand for key commodities. The levies by the US excluded energy, but the retaliatory move by China encompass all US goods, as well as export curbs on some rare earths.
The US is a major energy exporter; and sells oil and LNG to China, according to data from Kpler and the EIA.
Wall Street benchmarks sold off heavily, with the Dow Jones set to reach a correction while the Nasdaq was on track to enter a bear market.
Brent futures fell $5.29, or 7.5 per cent, to $64.85 a barrel and US West Texas Intermediate crude futures lost $5.57, or 8.3 per cent, to $61.83 a barrel. The oil benchmarks were set for the lowest close since the middle of the pandemic in April 2021.
Natural gas prices in Europe and Asia also took a tumble. European gas prices to plunged their lowest in over six months, with the Dutch front-month contract down 3.02 euros, or 7.7 per cent at 36.45 euros per megawatt hour (MWh) or $11.78/mmBtu, LSEG data showed. Asian spot liquefied natural gas (LNG) prices also remained at their lowest level in nearly six months.
Despite the market turmoil, Trump insisted that "my policies will never change" and urged the US Federal Reserve to cut interest rates.
Wall Street stocks dropped sharply in morning trading, with the blue-chip Dow falling below 39,000 points briefly for the first time since August.
The S&P 500 also briefly exceeded its Thursday loss — its largest drop since the Covid pandemic in 2020.
"Sentiment is so fragile right now," Chris Beauchamp, chief market analyst at online trading platform IG, said.
"Investors are firmly in the 'get me to cash now' phase, on fears that other nations will follow China's lead and of course that the US president will respond to China's tariffs with even more charges," he said.
"This trade war is like nothing we've seen for years, perhaps decades." — dpa
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