Oil prices tumbled by 8% on Friday, marking their lowest levels since the peak of the COVID-19 pandemic in 2021. The sharp decline followed China’s announcement of retaliatory tariffs in response to U.S. President Donald Trump’s recent imposition of new levies, sending shockwaves through global markets.
In a move that sent ripples across international trade, China revealed plans to impose a 34% tariff on all U.S. goods starting April 10. This escalatory step came after Trump raised U.S. tariff barriers to their highest point in over a century, leading to widespread market sell-offs and triggering fears of a full-blown global trade war.
As a result, Brent crude futures plummeted by $5.72, or 8.2%, reaching $64.62 a barrel by 12:31 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures fell $5.90, or 8.8%, to $61.05 per barrel. Both benchmarks were on track for their largest weekly percentage losses in over two years.
Experts are sounding alarms, warning that escalating trade tensions between the U.S. and China could lead to dire consequences for global economic growth, particularly for commodities like crude oil. “China’s aggressive countermove to U.S. tariffs all but confirms we are heading towards a global trade war; a war that has no winners and which will hurt economic growth and demand for key commodities such as crude oil and refined products,” said Ole Hansen, head of commodity strategy at Saxo Bank.
The dramatic oil sell-off was further exacerbated by a decision from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+. In response to market pressures, the group moved to accelerate output increases, now aiming to bring an additional 411,000 barrels per day (bpd) to the global market in May, significantly higher than the previously planned 135,000 bpd.
The confluence of escalating tariff wars and increased oil supply has created a volatile environment for global markets, with fears of reduced demand for oil looming large. The impact of these trade tensions and production adjustments by OPEC+ is likely to continue influencing oil prices in the coming weeks, with potential for further price volatility.
With global trade now facing heightened risks and demand for key commodities like crude oil under pressure, the outlook for the oil market remains uncertain. Industry experts will be closely monitoring the ongoing developments between the U.S. and China, as well as OPEC+’s production strategies, for signs of how the situation will evolve.
