Trade War Turbulence: Oil Prices Slide as US Slaps 104 Per Cent Tariffs on China
In the early morning hours today, Brent crude futures slipped $2.13, or 3.39 per cent, trading at $60.69 per barrel. These declines marked Brent’s lowest price since March 2021.
Crude oil prices suffered sharp losses early Wednesday, hitting their lowest levels in over four years, as concerns grew around the potential economic fallout of intensifying trade tensions between the US and China. The impact was compounded by expectations of higher global supply.
In the early morning hours today, Brent crude futures slipped $2.13, or 3.39 per cent, trading at $60.69 per barrel. Meanwhile, US West Texas Intermediate (WTI) dropped $2.36, or 3.96 per cent, to $57.22. These declines marked Brent’s lowest price since March 2021 and WTI’s weakest point since February 2021, reported Reuters.
The drop extended a losing streak that has stretched over five straight sessions, triggered by Washington’s announcement of sweeping new tariffs on Chinese imports. Market watchers fear that the escalation could hamper global economic growth and curtail fuel demand in the months ahead.
Escalating Trade War Weighs on Demand Outlook
Starting April 9, Wednesday, the US is enforcing a 104 per cent tariff on Chinese goods, according to a White House official. This includes an additional 50 per cent levy after Beijing declined to remove its 34 per cent retaliatory tariff before Tuesday’s noon deadline set by President Trump.
Beijing pushed back firmly, calling the move “US blackmail” and refused to yield to Washington’s pressure tactics. “China’s aggressive retaliation diminishes the chances of a quick deal between the world’s two biggest economies, triggering mounting fears of economic recession across the globe," said Ye Lin, vice president of oil commodity markets at Rystad Energy.
She added that “China’s 50,000 bpd to 100,000 bpd of oil demand growth is at risk if the trade war continues for longer, however, a stronger stimulus to boost domestic consumption could mitigate the losses.”
Supply Side Adds to Pressure on Crude Markets
In addition to the trade conflict, oil prices faced downward pressure from the decision by OPEC+ to increase production. The group, which includes members of the Organization of the Petroleum Exporting Countries and allies like Russia, agreed to raise output by 411,000 barrels per day in May. Analysts suggested this move could tip the market into surplus.
Goldman Sachs adjusted its forecast accordingly, predicting that Brent may decline to $62 per barrel and WTI to $58 by the end of 2025. By December 2026, the bank expected further declines to $55 and $51, respectively, the report noted.
Adding to the bearish sentiment, Russia’s ESPO Blend crude slipped below the $60 per barrel Western price cap for the first time ever on Monday.
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