Oil prices fall 2% to two-month low on worries about US tariffs

Oil prices fell more than 2% to a two-month low on Tuesday on negative economic news from the U.S. and Germany, driven in part by worries about U.S. President Donald Trump's push for trade tariffs.

Brent futures fell $1.61, or 2.25%, to $73.17 a barrel by 10:34 a.m. EST (1534 GMT), while U.S. West Texas Intermediate (WTI) crude fell $1.60, or 2.3%, to $69.10.

That put Brent on track for its lowest close since Dec. 23 and WTI on track for its lowest close since Dec. 10.

Data from the U.S. showed consumer confidence deteriorated at its sharpest pace in 3-1/2 years in February, with 12-month inflation expectations surging amid worries that tariffs on imports would raise prices for households.

Analysts said Trump's trade policies have raised concern at the U.S. Federal Reserve that higher import tariffs could boost inflation.

The Fed uses higher interest rates to combat rising prices. So long as the Fed and other central banks keep interest rates higher for longer, borrowing costs will remain elevated, which can slow economic growth and demand for oil.

Trump said tariffs against Canadian and Mexican imports scheduled to start on March 4 are "on time and on schedule" despite efforts by the two trading partners to address Trump's concerns about border security and fentanyl.

Negative news from Germany, the biggest economy in Europe, and uncertainty in China, the world's second biggest economy, also weighed on oil prices.

The German economy shrank by 0.2% in the final quarter of 2024 compared with the previous quarter, data showed on Tuesday.

The Trump administration said it is planning to toughen semiconductor restrictions on China, expanding former U.S. President Joe Biden's efforts to limit Beijing's technological prowess.