Global oil prices hit their lowest level in over three years on Wednesday, as escalating tensions between Washington and Beijing sparked fears of a looming recession.
Brent crude fell to $61.43 per barrel in early trading, down 2.21%. West Texas Intermediate (WTI) dropped to $58.08, a 2.52% decline. Both benchmarks briefly lost as much as 4%, marking the fifth consecutive day of losses, Reuters reported.
The sell-off follows US President Donald Trump’s decision to enforce a 104% tariff on Chinese imports.
The tariff hike took effect on April 9, with Trump warning of further penalties unless China abandons its current trade stance. In response, Beijing accused the US of “blackmail” and doubled down on its existing levies, Reuters reported.
China’s oil consumption growth – previously expected to rise by up to 100,000 barrels per day this year – may now stall if the trade war drags on, according to the media outlet.
At the same time, eight key OPEC+ producers on Thursday agreed to raise combined crude oil output by 411,000 barrels per day, speeding up the pace of their scheduled hikes and pushing down oil prices, CNBC wrote.
Oil futures also took a blow. The six-month premium for Brent futures contracts dropped to just 98 cents, down from $3.53 at the start of the month, reflecting growing concerns that demand is drying up faster than expected alongside supply excess, according to the data by Reuters.
Goldman Sachs revised its forecast for Brent and WTI to $62 and $58 per barrel by year-end, and as low as $55 and $51 by the end of 2026.
“In one positive sign for demand, data from the American Petroleum Institute industry group showed US crude inventories fell by 1.1 million barrels in the week ended April 4, compared with expectations in a Reuters poll for a build of about 1.4 million barrels,” Reuters wrote.