Citi Research on Monday lowered its 0-3 month Brent price forecast to $60 per barrel and also reduced its 0-3 month copper and aluminium price forecasts to $8,000 per metric ton and $2,200 per ton, respectively due to the latest tariff announcements.
Last week, U.S. president Donald Trump imposed a 10% baseline tariff on all imports to the U.S. and higher duties on dozens of other countries, including some of the United States' biggest trading partners. Following this, China hit back with additional 34% tariffs on all U.S. goods from April 10.
Oil prices fell nearly 4% on Monday amid an escalating trade war while base metals in London extended declines amid rising recession worries.
The physical impact of the tariffs imposed should be doubly bearish as the pre-buying and stockpiling of goods and commodities would fully reverse after tightening commodity markets for the past few months, the bank said in the note.
"Any rallies this week on minor trade deal headlines or delays to the imposition of the April 9 tariffs would provide opportunities to sell rallies in our view," analysts at Citi said in a note adding that "U.S. gas and gold should outperform near-term."
