BRENT oil prices dropped to $65 a barrel by the end of Friday, with uncertainty about how much further the decline will continue. This drop is a direct result of the U.S. administration imposing tariffs on all goods imported into the country, ranging from ten percent to as high as 46 percent and 49 percent on goods from Vietnam and Cambodia. This led to huge decline in stock values, sparking panic in global markets as investors brace for the potential fallout on Monday.

In Kuwait and the rest of the Gulf Cooperation Council (GCC) countries, the tariff rate stands at a relatively low ten percent. While trade with the U.S. is limited primarily to oil and gas, which are exempt from the tariffs, the impact of these new import taxes is still being felt. A tariff on oil and gas imports would have disastrous impact for U.S. gasoline consumers, which is why it did not seem to be the right moment for such a measure. OPEC+ finds itself in a difficult position, and is uncertain how to respond. The group recently decided to increase oil production starting next month and is considering pumping even more crude into the market from June onward. The decision aims to protect market share and boost domestic economies by increasing oil revenues. However, with oil prices at $65 a barrel, there seems to be little appetite for further price declines. Even though OPEC+ has made its decision, it might reconsider as the situation evolves. The timing of this move may not be ideal, and we must wait and see how things unfold.

There is limited demand for more oil right now, and inflation is expected to rise, creating an unclear economic outlook. Every country will need to prioritize domestic issues, face inflationary pressures, and tighten their belts. In these uncertain times, everyone needs to tighten their belts and save until the economic picture becomes clearer. Saving and reducing expenses is the wise choice right now. With inflation impacting the global economy, including the USA, which has been at the center of many economic challenges, the future remains unpredictable. Oil prices are expected to decrease, with $60 per barrel potentially being a target if OPEC+ increases production. The next six months will be critical, as countries negotiate and explore new trade alliances. China is expected to emerge as the primary beneficiary of these shifts. Global trade is in turmoil, but this presents an opportunity to reshape the trade map. New global alliances and partnerships will form, with China taking center stage as a major player in world trade.

By Kamel Al-Harami Independent Oil Analyst
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