Today we continue to see equity and commodity markets sell-off as U.S. reciprocal tariffs, which have raised fears of recession, took effect including a 104% duty on Chinese goods. European and UK Gas and power prices have also been affected and started dropping last week when President Donald Trump announced his plan on tariffs. Energy prices were further pressured by OPEC+’s decision to boost oil production in May. Gas prices have eased to levels not seen since September 2024, whilst oil prices are at its lowest since February 2021. Fears continue as the impact on energy intensive industries are unknown but presumably will include changing production plans which will affect demand levels. America’s trading partners are now seeking to find ways of narrowing their trade deficits and avoid the tariffs. South Korea has pledged to seek more US imports, including LNG. Closer to home the EU said its ready to discuss purchasing US energy with Washington, but the European Commission underlines the importance of avoiding over-dependence on a single supplier. The commission was reacting to statements by Donald Trump suggesting that the EU should purchase more US energy to the value of $350bn. The one thing that is for certain the prospect of a global trade war continues to make for an uncertain macro picture.
The US tariffs do have a plus side however for the EU. With China likely to refuse US energy, this may find itself heading towards Europe and as the US produce and export more – the EU may be the destination. Fears of being able to refill gas storages this summer now have taken a change from just over a week ago. In addition, the European Council is proposing 10% flexibility on 1 Nov target “when market conditions are unfavourable for filling the underground gas storages.” This number could be increased further through delegated acts “in case of persistent unfavourable market conditions”, according to EU diplomats.
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