Oil prices dropped more than 2% on Thursday, driven by concerns over a potential escalation of the U.S.-China trade war and the looming threat of a global recession, overshadowing earlier optimism sparked by President Donald Trump’s announcement of a 90-day pause on certain tariffs against most countries.
Brent crude futures fell by $1.77, or 2.7%, to $63.71 per barrel, while U.S. West Texas Intermediate crude dropped by $1.77, or 2.84%, to $60.58.
The decline followed a volatile session on Wednesday, during which crude prices had briefly plummeted by as much as 7% before recovering by around 4% after Trump’s tariff pause announcement. Despite the temporary relief, the reprieve did not include China, with tariffs on Chinese imports increased to 125%, deepening the trade standoff with the world’s second-largest economy and a major oil consumer.
The U.S.-China trade tensions have created uncertainty around global oil demand, raising concerns about further downward pressure on prices. Additionally, China imposed an additional 84% import tariff on U.S. goods, exacerbating the situation.
Despite the pause in some tariffs, experts warned that the world continues to face significant trade barriers, reminiscent of the most severe trade restrictions since the 1930s. The risk of weakening demand, coupled with rising oil production from OPEC, leaves little room for an immediate rebound in crude prices.
In terms of supply, the Keystone pipeline from Canada to the U.S. remained shut after an oil spill near North Dakota, and its return to service is still under evaluation. Meanwhile, the Caspian Pipeline Consortium resumed loading oil at one of its Black Sea moorings after a Russian court lifted restrictions on the facility.
In the U.S., crude inventories increased by 2.6 million barrels in the week ending April 4, nearly double the expected rise, further adding to the bearish sentiment surrounding the market.
