In a sharp market downturn, crude oil prices tumbled to their lowest levels since the 2021 pandemic. The steep drop was triggered by rising tensions in the global trade war, especially between the United States and China, sparking fears of economic slowdown and reduced demand.
Chinaās Tariff Response Sparks Global Shockwaves
On Friday, oil markets reacted swiftly after China announced a significant escalation in the trade standoff. In response to the latest tariff hikes by U.S. President Trump, China plans to impose a 34% tariff on all American goods starting April 10. Although energy products like oil, gas, and refined fuels are exempt, the broader economic impact triggered alarm across global markets.
As a result, Brent crude futures dropped $5.30, or 7.6%, reaching $64.84 per barrel by midday. West Texas Intermediate (WTI) crude fared worse, falling by $5.47, or 8.2%, to settle at $61.48. Both benchmarks are now on course for their steepest weekly losses in more than two years.
Analysts Warn of Economic Repercussions
Industry experts are voicing concerns. Ole Hansen, Head of Commodity Strategy at Saxo Bank, stated, āChinaās aggressive reaction to U.S. tariffs signals a deepening global trade war ā one with no winners. The impact on growth and commodity demand, especially crude oil, is significant.ā
The situation is further compounded by fears of a broader economic slowdown. Economists worry that the ongoing tariff exchange will stoke inflation, strain global supply chains, and reduce industrial activity ā all of which contribute to weakened oil demand.
Read:Ā Gold Prices Tumble as Markets React to New Tariffs
OPEC+ Adds Fuel to the Fire
Adding to the bearish sentiment, OPEC and its allies, collectively known as OPEC+, decided to accelerate oil production increases. The group plans to add 411,000 barrels per day to global supply in May ā a sharp rise from the previously planned 135,000 barrels per day.
This unexpected move raises the risk of an oversupplied market at a time when demand could be slipping. Investors and analysts alike fear that rising production, coupled with weaker economic activity, will further drag prices down.
Forecasts Slashed by Major Financial Institutions
Reflecting the uncertain market outlook, Goldman Sachs revised its oil price projections. The investment bank cut its December 2025 forecast for Brent crude by $5 to $66 per barrel. Similarly, WTIās forecast was lowered to $62 per barrel.
Daan Struyven, Goldmanās Head of Oil Research, warned, āThe risks to our updated forecast remain skewed to the downside. A potential global recession and increased OPEC+ output could push prices even lower in 2026.ā
Market on Edge
The combination of trade tensions, inflation fears, and supply concerns has pushed oil markets into turbulent territory. With no resolution in sight for the trade standoff and production increases looming, crude oil may remain under pressure in the coming months. Investors will be watching closely for diplomatic developments and signals from major producers to gauge the marketās next move.
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