Oil down amid rising US crude inventories, China-US tariff war

Oil prices fell more than 2% on Wednesday as a large build in U.S. crude and gasoline stockpiles signalled demand weakness while concern about a new China-U.S. trade war fuelled fears of softer economic growth.

Brent crude futures were down $1.55, or 2.03%, at $74.65 a barrel at 11:30 a.m. EST (1428 GMT). U.S. West Texas Intermediate crude (WTI) was down $1.57, or 2.16%, to $71.13.

U.S. crude oil inventories rose sharply last week as demand softened on ongoing refinery maintenance, the Energy Information Administration (EIA) said on Wednesday.

"Refiners just don't have a call for crude right now," said John Kilduff, a partner at Again Capital in New York. "They're racing into maintenance, given the slack demand we're seeing for gasoline," he added.

Concern over a new trade war between the U.S. and China, the world's largest energy importer, was also pressuring prices.

China announced tariffs on U.S. imports of oil, liquefied natural gas and coal on Tuesday in retaliation for U.S. levies on Chinese exports, pushing WTI down by 3% at one point to its lowest since Dec. 31.

"Trump tariff chaos and trade war is no good for global growth and oil demand growth. Business investments and consumer spending will likely fall in the face of these highly erratic and growth-negative actions," said Bjarne Schieldrop, chief commodities analyst at SEB.

"The oil market is now caught between increasing fears that an escalating trade war will damage global oil demand growth on the one hand and possible sudden disruption of Iranian oil export," he added.

Iran's President Masoud Pezeshkian urged OPEC members to unite against possible U.S. sanctions on Wednesday after Trump said he would restore the "maximum pressure" campaign on Iran, which he enacted in his first term.

Trump drove Iran's oil exports to near zero during part of his first term after re-imposing sanctions to curtail the country's nuclear programme.

Tehran's oil exports brought in $53 billion in 2023 and $54 billion a year earlier, according to U.S. Energy Information Administration estimates. Output during 2024 was running at its highest level since 2018, based on OPEC data.