Oil Market To Remain Bearish

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Oil Market To Remain Bearish

Crude Oil Market To Remain Bearish In Long Term

Crude oil prices are riding a bullish trend in the short term. However, that will not last for long as it is mainly due to the trade tensions between the USA and the other countries.

According to experts, the long-term trajectory of the crude oil market remains bearish despite the recent gains. The main driving force behind the recent upside in crude oil was Trump's announcement of tariffs on China, Mexico, & other countries.

Tariffs To Have Minimal Impact On Oil

Unless an agreement is reached by the US & other countries, the tariff could have a long-lasting effect on economic growth, inflation, and geopolitics.

Despite the recent escalation in the trade tensions, experts commented that it will have only minimal impact on oil prices. It's worth noting that a 10% tariff is added to energy imports from China and Canada.

Although the tariffs are in place now, Trump has kept the door for negotiations open for the neighbours. Although, it is clear that the Trump administration will not reverse these tariffs.

According to Goldman Sachs, the biggest effect will be on the oil producers in Canada. This means a discount of $3-$4 could be applied to the crude prices.

On the other hand, consumers in the USA will likely experience a $2-$3 increase in the costs of refined products. Also, the seaborne oil imports from Mexico & China will likely be redirected, according to Goldman Sachs.

Given all of this, Goldman Sachs believes that the forecast for oil prices in 2025 - 2026 will remain unchanged. They have reached this conclusion based on the global supply & demand. In addition, the bank believes that the oil tariffs on Canada are already priced in!

That's why Goldman Sachs believes that the long-term outlook for oil prices remains bearish. However, any developments in the form of trade wars and tariffs by the Trump administration could change it.

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