Reference News Network reported on April 18th that according to a report from the website of Le Figaro of France on April 15th, since US President Donald Trump imposed punitive tariffs on 180 countries and regions on April 2nd, international oil prices have significantly fallen. The price of West Texas Intermediate crude oil fell to $55 per barrel on April 9th, down 23% from the closing price on "Liberation Day". Brent crude oil, another international reference, also saw a similar situation, with its price briefly falling below $60 per barrel, returning to the level four years ago, although it has rebounded somewhat recently. The decline in oil prices is a double-edged sword for Trump, who always wants to have his cake and eat it too.

The decline in oil prices will be directly reflected in the fuel prices at gas stations, which is good news for American consumers. This is undoubtedly good news for American consumers who keep an eye on daily consumer goods labels, as fuel costs account for nearly 15% of the average consumer basket used to measure inflation, making it a key observation indicator. If crude oil prices continue to hover around $60, the current gasoline price of $3.20 per gallon is expected to fall by about $0.15 (1 gallon is approximately 3.8 liters) within the next 15 days. This is good news for Trump, who hopes that gasoline prices can drop to $2.50 per gallon. For American consumers, this would be an ideal compensation to counteract the rise in prices brought about by new tariffs.

However, the decline in oil prices may contradict one of Trump's obsessions - to drive a surge in U.S. energy production. This president repeatedly tells oil producers to "drill, baby, drill." Despite the fact that the U.S. is already the world's largest oil producer, he still wants to further expand exploration. He also demands that the EU purchase up to $350 billion worth of U.S. energy raw materials.

But the lower the oil price, the weaker the willingness of enterprises to explore new oil wells. When the price falls below $60 per barrel, many U.S. oil producers, especially those operating in aging basins, will find it difficult to make a profit and will be forced to stop drilling and lay off workers. A recent survey by the Dallas Federal Reserve Bank of 81 shale oil companies (these companies extract large amounts of crude oil from the U.S. underground through high-pollution methods) showed that they will only find it profitable to develop new oil wells when the price exceeds $65.

This does not even take into account the impact of the newly effective tariffs, particularly steel tariffs. According to Susan Bell, vice president of Rystad Energy, tariffs have caused drilling rod procurement costs to soar by 25%, potentially increasing the cost of developing new oil wells by 10%.

In addition, there is a cost that cannot be quantified but is considered a heavy burden by industry practitioners - uncertainty. This uncertainty is caused by Trump's unpredictable policy swings on tariffs. A CEO of an oil company candidly told the Dallas Federal Reserve Bank: "In my more than 40-year career, I have never been so uncertain about the future of my company as I am now." Bell concluded: "During uncertain times, the safest approach for oil companies is to reduce investment."

Bell predicts that if oil prices remain at their current levels, the United States will immediately shut down about 50 drilling platforms, with more closures to follow. Experts from S&P Global predict that if oil prices fall to $50, U.S. crude oil production could decrease by more than one million barrels per day, or nearly 8%. Bill Smid, director of investment at Smid Capital Management, summarized: "Trump wants oil prices to fall to $50 per barrel, but if they actually reach that level, the number of companies in the industry will be halved."

Kirk Edwards, president of Latigo Oil Company, said: "We are facing another double blow again." He believes that if oil prices do not recover in the coming months, a "catastrophic event" could occur in the Permian Basin, the U.S.'s high-yield oil field.

The U.S. Energy Information Administration recently downgraded its global and U.S. oil demand growth forecasts. Goldman Sachs predicts that by December 2025, the price of West Texas Intermediate crude oil will fall to $59 per barrel, and further to $55 per barrel by 2026. (Translated by Zhao Kexin)

Source: https://www.toutiao.com/article/7494562599741178409/

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