Oil is a commodity acutely sensitive to shifts in demand within the global economy. Not surprisingly, it’s also demonstrating a very strong inverse correlation with Donald Trump’s tariffs.

The US president might have wanted to usher in a “golden age” for the American oil industry, but so far this year, it’s been fool’s gold.

The oil billionaires who poured more than $US450 million ($705 million) into his election campaign should have been more careful what they wished for, with the US domestic oil price tumbling from just above $US80 a barrel in the days preceding the Trump inauguration to about $US63.50 today. It has been below $US60 a barrel this month.

The price of oil has been highly sensitive to Donald Trump’s pronouncements on tariffs.Credit: AP

There is a clear relationship between the price and Trump’s tariffs.

Before “Liberation Day” – April 2, when Trump theatrically unveiled his baseline universal tariff and his so-called “reciprocal tariffs” in the Rose Garden – the West Texas Intermediate price was just above $US71 a barrel. A week later, it was $US59.58 a barrel. On April 9, however, Trump paused the reciprocal tariffs for 90 days and the price bounced back above $US60 a barrel.

That sensitivity to every Trump pronouncement/social media post on tariffs is not surprising.

The tariffs will depress US economic activity – the International Monetary Fund said last week they would reduce US economic growth this year from the 2.7 per cent it forecast in January to 1.8 per cent – and therefore domestic demand for oil and gas.

The tariffs and retaliation from China, and perhaps elsewhere, will also affect global growth. The IMF has cut its forecast for global growth this year from 3.3 per cent to 2.8 per cent. The average global growth rate this century has been 3.7 per cent.

Thus, both US and global growth are expected to slow, with a consequent impact on........

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