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Tariffs clobber ANS
Prices go abruptly higher April 9 as Trump delays tariffs on nations other than China
Steve Sutherlin Petroleum News
Alaska North Slope crude, West Texas Intermediate and Brent got a reprieve April 9 from a weeklong pummeling that was dished out after President Donald Trump surprised financial markets the afternoon of April 2, announcing unexpectedly large tariffs on imports from a lengthy slate of global trading partners.
(See chart in the online issue PDF)
The news hit crude on April 3 trading, sending ANS plunging $3.51 to close at $72.74 per barrel, while WTI plummeted $4.76 to close at $66.95 and Brent plummeted $4.81 to close at $70.14.
Losses accelerated April 4, as ANS plummeted $4.27 to close at $68.47, WTI plummeted $4.96 to close at $61.99 and Brent plummeted $4.56 to close at$65.58.
U.S. and foreign equities took a drubbing as well, cast adrift on a storm of uncertainty as investors and analysts scrambled to understand the details of the tariffs and gauge the potential fallout for economies around the world.
Business leaders hoping that Trump's April 2 tariff unveiling would end speculation found that the press event at the White House Rose Garden introduced a panoply of variables unlikely to be sorted out quickly.
Many nations came forward quickly to make a deal with the Trump administration to open their markets to U.S. goods in exchange for tariff relief.
China dug in, and -- vowing to fight to the end -- hit U.S. exporters with huge new tariffs and restrictions, which were met with larger tariffs from Trump.
Crude sloshed lower each day as foggy forward visibility prompted a retrenchment of spending plans for business and consumers alike.
But on April 9, Trump surprised markets again with a 90-day pause on the new tariffs, except for China. ANS rocketed $3.73 higher to close at $68.81, WTI leapt $2.77 to close at $62.35 and Brent leapt $2.66 to close at $65.48.
WTI and Brent were down sharply April 9 prior to the tariff abatement announcement. Brent dipped briefly below $60 per barrel in early trading.
From Wednesday to Wednesday, ANS sank $7.45 from its $76.26 close on April 2, to $68.81 April 9.
On Tuesday April 8, ANS was a whopping $11.18 lower than its April 2 close after dropping $2.40 to close at $65.08. WTI fell $1.12 on the day to close at $59.58 and Brent fell $1.39 to close at $62.82.
ANS fell a dollar April 7 to close at $67.48, as WTI fell $1.29 to close at $60.70 and Brent fell $1.37 to close at $64.21.
On April 9, ANS closed at a $6.46 premium over WTI and at a $3.33 premium over Brent.
Tariff pause overcomes bearish inventory build Crude prices jumped April 9 despite U.S. commercial crude oil inventories for the week ending April 4 having increased by 2.6 million barrels from the previous week, according to data released by the U.S. Energy Information Administration the same day in its Weekly Petroleum Status Report. At 442.3 million barrels, inventories are 5% below the five-year average for the time of year.
Gasoline and Distillate drawdowns struck a bullish note, however.
Total U.S. motor gasoline inventories decreased by 1.6 million barrels over the week to 236.0 million barrels -- level with the five-year average for the time of year, the EIA said. Distillate fuel inventories decreased by 3.5 million barrels for the period, to 111.1 million barrels -- 9% below the five-year average for the season.
Also striking a bullish chord for crude was continued dollar weakness, which makes oil easier to afford for buyers that must convert other currencies to make purchases. The U.S. Dollar Index hit a 2025 low of 102.07 on April 3, down from 108.49 on Jan. 1.
Saudi cash shortage looms Saudi Arabia may be forced to raise debt or cut spending as crude prices plunge, to continue to fund its ambitious agenda to diversify its economy.
The International Monetary Fund and economists estimate Riyadh needs oil prices above $90 to balance its budget, Reuters reported April 8.
Saudi Arabia funds its Vision 2030 reform program off budget, but the government funds mammoth infrastructure projects linked to the program designed to wean the economy from oil.
"Saudi Arabia is likely to rely on debt financing, and it will have to delay or scale back some planned contracting awards given 2024 was already in a twin deficit," said Karen Young, senior research scholar at Columbia University's Center on Global Energy Policy.
Before the Trump tariff announcement, Young said analysts had expected Saudi public debt to grow by $100 billion in three years, after rising 16% to some $324 billion in 2024.
The Saudi 2025 budget released in November projected a 3.7% fall in total revenue.
The country's $925 billion Public Investment Fund has spent hundreds of billions of dollars on projects such as a camel dairy firm and a massive futuristic city in the desert.
Future projects include the 2029 Asian Winter Games, featuring artificial snow and a man-made freshwater lake, as well as the 2034 World Cup, with 11 new stadiums and others renovated.
The Saudi budget-balancing price target of $90 may not be reached anytime soon.
Goldman Sachs has cut its oil price forecast, calling for Brent and WTI prices to drop to $62 and $58, respectively, by December 2025, and to $55 and $51 by December 2026. The forecast assumes that the U.S. economy will dodge recession and that the Organization of the Petroleum Producing Countries and its allied producing nations will only moderately increase production.
Despite declines of late in oil prices, the impacts of recession risks and/or the full cancellation of OPEC+ production cuts have not yet been fully reflected in crude prices, Goldman Sachs said.
"It is unlikely that oil prices will sustain a significant drop below $40 per barrel for two reasons: first, U.S. shale oil provides increasingly solid price support at lower prices; second, a potential economic recession in the U.S. in 2025 is unlikely to be deep, partly because there are no significant financial imbalances in the private sector," Goldman Sachs said.
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