Oil prices along with many other classes of risk are entering a phase of guessing. The metals tariffs announced by the White House yesterday brings an idea that even though Canada and Mexico are enjoying a one month stay of hand from trade restrictions, this notion that tariffs are transactional threats has just been dented.
Trading conditions were choppy last week, but the sentiment soured somewhat in equities and oil continued its downward journey for the third successive week. Potential and in the case of China very real trade restrictions are the sword of Damocles above stock markets.
Like a boxer, sometimes markets must cover up when confronted with big punches. If the left hand of the heavyweight Laughing Boy Trump is bearish by repeating a promise that the US will raise production to bring oil prices down, then the right hand is the bullish announcement of the first sanctions on ships that handle Iranian oil exports to China.
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