Oil prices have significantly fallen, with Brent crude hitting its lowest level since 2021, largely due to China’s announcement of new tariffs on U.S. goods in response to American trade actions. As of Friday, Brent dropped to $66.05, while WTI fell to $62.77. This decline reflects concerns over a potential global economic slowdown and an unexpected increase in OPEC+ production. Additionally, European gas prices have also decreased amid the escalating trade tensions.
Significant Drop in Oil Prices Amidst Trade Tensions
London (awp/afp) – Oil prices have experienced a substantial decline on Friday, with Brent crude, the reference point for Europe, Africa, and the Middle East, reaching its lowest point since 2021. This drop follows retaliatory trade measures announced by Beijing in response to U.S. actions.
Current Market Trends and Future Implications
As of approximately 10:50 GMT (12:50 CEST), the price of a North Sea Brent barrel for June delivery plummeted by 5.83%, settling at $66.05, after dipping to $65.36, marking the lowest level since August 2021. Similarly, the West Texas Intermediate (WTI) barrel, the U.S. benchmark for May delivery, fell by 6.24% to $62.77.
Starting April 10, China plans to implement additional tariffs of 34% on American goods, a move that has intensified the decline in oil prices, already affected by the U.S. administration’s protectionist policies, which haven’t been seen since the 1930s. On Thursday alone, oil prices had already dropped nearly 6.5% during trading.
This situation presents a significant challenge for China, the top oil importer globally, as it faces a new 34% import tax on top of the existing 20% tariffs. Analyst Arne Lohmann Rasmussen from Global Risk Management notes that the radical tariffs introduced by Trump have led investors to perceive that the U.S. economy—and potentially the global economy—is heading toward a notable slowdown or even a recession.
While energy products are exempt from these tariffs, their prices remain highly susceptible to economic downturns, which explains the recent decline in oil prices amid recession concerns. The anticipated trade war serves as a bearish indicator, further compounded by an unexpected rise in production from the Organization of the Petroleum Exporting Countries and its allies (OPEC+).
OPEC+ has announced a ‘production adjustment of 411,000 barrels per day’ for May 2025, a statement that has taken the markets by surprise and contributed to the downward price trend. Market expectations were leaning towards an increase of 135,000 barrels per day for May, aligning with an 18-month plan to gradually return 2.2 million barrels per day that had been withheld by eight OPEC+ members, as highlighted by Mukesh Sahdev from Rystad Energy.
Bjarne Schieldrop, an analyst at SEB, comments that the OPEC+ decision is likely tied to internal challenges in enforcing quotas, leading to frustration among compliant members. This scenario may enable Donald Trump to impose sanctions on Iran, Venezuela, and potentially Russia, without the concern of excessively high oil prices, according to Arne Lohmann Rasmussen.
Following his inauguration, Trump pushed for increased production by OPEC+, particularly targeting Saudi Arabia, to lower energy prices. In addition, European gas prices have also been affected by the trade war, experiencing a drop of over 7% in trading. The Dutch TTF is currently priced at 36.250 euros per megawatt-hour (MWh), reaching its lowest mark since last September.
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