Oil prices fell 8% during trading on Friday, heading towards their lowest closing level since the height of the coronavirus pandemic in 2021, after China retaliated with tariffs in response to the package of tariffs announced by US President Donald Trump this week.
Brent crude futures fell $5.72, or 8.2%, to $64.62 a barrel, while US West Texas Intermediate crude futures lost $5.90, or 8.8%, to $61.05.
Both benchmarks were on track to post their largest weekly percentage losses in more than two years, heading for their worst weekly performance in several months, amid growing fears of a global trade war following the announcement of new tariffs.
China announced it would impose an additional 34% tariff on all US goods starting April 10, and countries around the world prepared to retaliate after Trump raised tariff barriers to their highest level in more than a century, leading to a significant decline in global financial markets.
President Trump announced last Wednesday the imposition of tariffs ranging from 10% to 40% on all imports into the United States, including all Arab countries.
“China’s aggressive response to US tariffs pretty much confirms that we are heading towards a global trade war; a war with no winners that will negatively impact economic growth and demand for commodities such as crude oil and refined products,” said Ole Hansen, head of commodity strategy at Saxo Bank.
The decision by the Organization of the Petroleum Exporting Countries (OPEC), which produces about 40% of the world's crude oil, and its non-OPEC+ alliance to accelerate plans to increase production has also contributed to the oil sell-off, leading to a 6% decline in oil prices. The group now aims to nearly double the expected volume to 411,000 barrels per day (bpd) to the market in May, instead of the previously planned 135,000 bpd.
On Thursday, eight major OPEC+ producers agreed to a combined increase in crude oil production of 411,000 barrels per day, accelerating the pace of planned increases and pushing prices lower. The decision included Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman.
Goldman Sachs on Thursday lowered its oil price forecasts for Brent crude and US West Texas Intermediate crude for December 2025 by $5 to $66 and $62 per barrel, respectively, saying that"the two main downside risks we identified—escalating tariffs and a slight increase in OPEC+ supply—have already materialized."
The bank also lowered its oil price forecasts for 2025 and 2026, adding that it"no longer provides a range for expected prices, given that price volatility is likely to remain elevated due to the increasing risks of recession." In a worst-case scenario, S&P Global Market Intelligence analysts expect global oil demand growth to decline by 500,000 barrels per day.
Investment bank JPMorgan raised its estimate of the probability of the global economy entering a recession this year to 60%, up from a previous forecast of 40%.
