Oil prices plunge after new U.S. tariffs and increased oil production. A lower oil price can have both positive and negative consequences for you.
Oil prices have fallen for five days in a row, driven by increased production from Saudi Arabia and fears of a trade conflict after new US tariffs. The market is now characterized by great uncertainty. For you, the low prices will mean cheaper fuel.
The price of oil (Brent oil) has today been down to $62 a barrel. This is the fifth straight day of decline. It is now at its weakest level since 2021.
The decline began when US President Donald Trump presented the new tariffs.
We are closely monitoring market developments. The market is reacting negatively to increased tariffs and the potential consequences of a trade war, says oil fund manager Nicolai Tangen to NRK.
Tangen adds:
We have repeatedly said that we cannot expect the market to continue to rise, and we must be prepared that the time ahead may be demanding.
Oil analyst Ole-Rikard Hammer at Arctic Securities says the market is characterized by great uncertainty.
Trump's tariff move is having an impact on the level of economic activity. Many economists are now expecting a significant economic setback.
The reason why the oil price is affected by the high tariffs, he says, is because oil consumption is closely linked to economic activity.
Oil is used for transportation and industry.
Hammer still says there is no reason to panic – even though he refers to the plunge in oil prices as panic selling.
$62 a barrel is not a very low price if we look at the historical price trend. It could fall further without there being a complete crisis, says the oil analyst.
Although $62 a barrel is the lowest level in several years, the oil price has been much lower before.
During the corona pandemic in 2020, it plunged to below $20 a barrel. In 2008, it was as high as $147 before collapsing again when the financial crisis hit.
The oil price is determined by supply and demand. When many people need oil, the price rises. When fewer people need it – or more is produced than the market needs – the price falls.
He also emphasizes that the fall we have seen now does not mean that oil production is falling.
World oil consumption is increasing, he says.
Lower oil and gas prices mean lower revenues for Norway. And a higher tariff will lead to less demand for oil.
It is far too early to say whether the decline will have an impact on activity on the Norwegian shelf.
Ståle Kyllingstad owns the IKM group, which consists of a number of companies in the oil service industry.
He points to one reason other than tariffs for the sharp drop in oil prices: namely that Saudi Arabia decided a few days ago to increase production.
It is not a good sign, because it is actually an oil balance and maybe even overproduction. Saudi Arabia is tired of holding back its production so that other countries run away with the profits, he says.
Ståle Kyllingstad, owner of the oil service company IKM, points to increased production in Saudi Arabia as an important reason for the price drop. He fears less exploration and higher inflation.
For ordinary people, lower oil prices can lead to cheaper fuel and lower electricity prices, especially when gas prices also follow. But in the long term, it could backfire if the oil industry slows down and jobs disappear.
Source: NRK (in Norwegian)
Also read the publication:
Scientists Develop New Nanostructured Sorbents for Water in the Arctic
