Noor Trends News, Technical Analysis, Educational Tools and Recommendations
Oil prices plummeted by 7% on Friday, hitting their lowest level since 2017, as concerns intensified regarding the potential economic repercussions of wide-ranging tariffs. This sharp downturn was compounded by a major oil-producing nation’s promise to increase output in case of war and a key oil producers’ group’s decision to boost production in May.
A significant escalation in the global trade war, triggered by China’s increased tariffs on U.S. goods, sent oil prices tumbling 7% on Friday. This sharp drop resulted in the lowest closing prices for oil in over three years, as investors grew increasingly concerned about a potential recession. China’s announcement of a 34% tariff hike on all U.S. goods, effective April 10th, followed retaliatory preparations by nations worldwide in response to the highest U.S. tariff barriers in over a century. Consequently, Brent crude futures fell $4.56 (6.5%) to $65.58 a barrel, and U.S. West Texas Intermediate crude futures decreased by $4.96 (7.4%) to $61.99. During the session, Brent touched a four-year low of $64.03, and WTI reached $60.45. Both benchmarks experienced their largest weekly percentage losses in a considerable period: Brent in a year and a half, and WTI in two years.
The price drop followed a major Asian economy’s announcement of retaliatory tariffs on U.S. goods in response to tariffs imposed by the U.S., sparking fears of an escalating global trade conflict. Market observers suggest that traders are increasingly worried about the detrimental effects such tariffs could have on international commerce and overall economic growth, leading to a significant reduction in the anticipated need for crude oil.
Further contributing to the downward pressure, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) announced plans to increase their collective oil production by a substantial 411,000 barrels per day in May. This represents a considerable rise from the previously planned 135,000 barrels per day, according to a statement from the organization.
By Friday afternoon, Brent crude, the benchmark for international oil prices, had fallen by $4.57 to $65.56 a barrel, while U.S. West Texas Intermediate (WTI) crude was down $5 to $62 a barrel. Since the market close on Wednesday, before the tariff announcement, Brent crude has dropped by nearly 13%, and WTI has decreased by 14%.
Will Cheaper Oil Mean Lower Fuel Prices?
While the decline in crude oil prices often influences the cost of gasoline at the pump, several other factors play a significant role. Refinery and distribution costs, taxes, and company profits also contribute to the final price consumers pay. Consequently, it remains unclear to what extent this oil sell-off will translate into lower gas prices for drivers. Currently, the national average price for a gallon of regular gasoline in the U.S. is $3.27, according to data. This is an increase from $3.10 a month ago but a decrease from $3.57 at the same time last year.
Further Price Declines Expected?
According to experts, crude oil price forecasts were revised late Thursday, citing weakened demand, escalating tariffs, growing recession risks, and increased supply. They lowered previous December 2025 price forecasts for Brent and WTI to $66 and $62, respectively, indicating a belief that further price declines are possible.
Fuel Exempt from Tariffs, but Wider Impact Feared
While fuel was notably exempt from the extensive tariffs announced earlier in the week, the head of state has consistently promoted increased domestic energy production and lower prices as a way to ease inflation, which remains above the central bank’s 2% target.
Key Takeaway
The trade war escalated, recession fears rise, and consequently, oil demand growth is to take a sizeable hits. The fact that U.S. energy imports are exempted, and OPEC+ produced a bombshell by re-adding more oil in May than originally planned pours fuel to the bear’s fire. Volatility will persist, risk is off, and currently, it is impossible to foretell when appetite for oil and equities will return.
Background to the Price Slump
The significant drop in oil prices occurs as global leaders react to the widespread “reciprocal tariffs” imposed by the U.S. on over 180 countries, including a baseline 10% tariff for all. On Friday, state media from a major Asian economy announced a retaliatory measure, imposing an additional 34% import duty on U.S. goods. This is in direct response to the U.S.’s new 34% tariff on goods from that nation, which, when added to existing tariffs, brings the total rate to a substantial 54%.
