Oil prices are experiencing a notable surge as geopolitical tensions escalate following President Trump's announcement of new trade tariffs targeting Europe. The heightened trade tensions have led to increased economic uncertainty, prompting investors to seek safe-haven assets like the US dollar, which has strengthened amid the turmoil. The tariffs are expected to impact export-dependent sectors, particularly autos and technology, contributing to a bearish sentiment in global stock markets.
The flattening of the US Treasury curve, driven by rising short-term yields on inflation concerns, suggests market expectations of potential interest rate hikes or stronger economic performance in the near term. Meanwhile, European bond yields have fallen as investors anticipate possible rate cuts by the ECB and BOE, further supporting bond prices. In this environment, oil prices have risen, likely due to fears of supply disruptions amid the ongoing trade frictions.
As of 05:52 on February 3, West Texas Intermediate (WTI) crude is trading at $73.95 per barrel, up from its last close of $72.53. This 2% increase reflects the market's response to the geopolitical developments and the potential impact on global oil supply chains.