Citi Research has adjusted its forecast for Brent crude oil prices, lowering the 0-3 month projection to $60 per barrel. This revision aligns with similar reductions in forecasts for copper and aluminum, which are now set at $8,000 per metric ton and $2,200 per ton, respectively.
The changes come in light of recent tariff announcements that have shaken the market. Last week, U.S. President Donald Trump enacted a 10% baseline tariff on imports into the United States while also increasing duties on various trading partners, which include some of the U.S.’s largest markets.
In response, China announced a significant increase of 34% in tariffs on all U.S. goods starting April 10. This tit-for-tat escalation in tariffs has exacerbated concerns about a potential trade war.
As a result of these developments, oil prices experienced a nearly 4% decline on Monday, reflecting broader anxieties over an impending recession. Additionally, base metals traded in London faced continued price decreases amid these rising worries.
According to Citi, the physical implications of these tariffs could worsen the situation, as the recent pre-buying and stockpiling activities are expected to reverse after a tightening period in commodity markets. Citi analysts noted that any potential price rallies this week, spurred by minor trade deal discussions or delays in tariff implementations, should be seen as opportunities for selling.
They also suggested that U.S. natural gas and gold may show stronger performance in the near term, despite the overall bearish sentiment influencing the commodities market.