Crude has dropped below $60 a barrel as markets brace for the fallout of the trade war and weaker global demand
Oil prices have dropped to their lowest point in over four years, with losses deepening on Wednesday as markets respond to fears of recession and slowing energy demand.
Brent crude, the global benchmark, fell to about $61 per barrel, while US West Texas Intermediate (WTI) dropped to around $58, both reaching their lowest levels since February 2021.
The slide began after US President Donald Trump announced a round of sweeping tariffs on most imports last week. Since then, prices have tumbled around 16%, as concerns grow that a global trade war could damage growth and reduce fuel consumption. The situation escalated on Wednesday when Trump’s tariffs took effect. While energy imports were exempt, the markets reacted sharply.
The new round of tariffs brings the rate on Chinese goods to 104%, up from the 34% initially announced. China had responded with a matching 34% tariff, prompting the White House to raise the stakes.
China’s Commerce Ministry vowed to respond decisively, raising fears of a broader economic slowdown. Analysts worry that prolonged tensions between the two top economies could drag down trade and stifle investment.
OPEC and its allies, including Russia, added pressure to the market by announcing a 411,000 barrel-per-day production increase for May. Analysts say this could lead to oversupply and deepen price drops.
“Crude oil has been in free-fall ever since President Trump unveiled fresh tariffs on US imports Wednesday evening,” Trade Nation senior market analyst David Morrison said in a note seen by Business Insider. He added the OPEC+ production boost was a “double whammy.”
Morrison said oil prices may stabilize within a narrow range, as investors anticipate weaker demand and strong supply. He noted this trend supports Trump’s goal of providing cheap energy to strengthen manufacturing.
The White House has pushed to bring crude prices down to $50 or lower, according to J.P. Morgan. Trump reinforced this goal on Monday, writing on Truth Social: “Oil prices are down, interest rates are down,” while highlighting the benefits of his trade strategy.
Russia was left out of the new tariffs. The White House explained that the existing sanctions already “preclude any meaningful trade,” making further restrictions unnecessary.
However, Russia’s central bank warned that the collapse in oil prices and the expanding trade conflict could harm its economy. “If the escalation of the tariff wars continues, this usually leads to a decline in global trade and the global economy, and possibly, demand for our energy resources,” central bank head Elvira Nabiullina said on Tuesday.
Russia’s Urals crude also dropped sharply, briefly nearing the $50-per-barrel mark for the first time in almost two years, before recovering to around $67.
