Oil prices dropped to four-year lows on Wednesday following China’s announcement of additional tariffs on U.S. goods in retaliation for President Donald Trump’s trade policies.
China revealed it would impose 84% tariffs on U.S. goods, up from the previously announced 34%, which significantly impacted market sentiment.
By 1153 GMT, Brent futures had fallen by $4.02, or 6.40%, to $58.80 a barrel, while U.S. West Texas Intermediate crude futures were down $4.03, or 6.76%, at $55.55. Both contracts saw losses of about 7% before partially recovering.
Trump’s 104% tariffs on Chinese goods also went into effect early Wednesday, adding pressure on the markets as they reflect ongoing tensions between the world’s two largest economies. In response, European Union countries were expected to approve their first retaliatory countermeasures, joining China and Canada in pushing back against the tariffs.
The escalation in trade tensions has raised fears of a global economic slowdown, with the oil market particularly vulnerable. The latest tariffs have also contributed to a drop in oil demand, which is expected to impact China’s oil consumption growth, potentially affecting oil prices further.
In addition to the tariffs, the decision by the OPEC+ group of producers to increase output by 411,000 barrels per day in May has added to concerns about an oversupply in the market, pushing oil prices even lower.
As oil prices continue to slide, Russia’s ESPO Blend price fell below the $60 per barrel Western price cap for the first time on Monday. On a more positive note, data from the American Petroleum Institute showed that U.S. crude inventories decreased by 1.1 million barrels in the week ending April 4, contrary to expectations for a build in stockpiles.
Official U.S. inventory data from the Energy Information Administration is expected later Wednesday, providing further insights into market trends.
