Oil extends plunge after steepest fall in 3 years on tariffs, Opec+ supply boost

HOUSTON – Crude oil prices fell further on April 4 after

US President Donald Trump’s tariffs

and a decision by the Organisation of the Petroleum Exporting Countries and its allies (Opec+) to increase output faster than previously announced triggered the worst rout since 2022. 

West Texas Intermediate traded below US$67 a barrel after losing 6.6 per cent to close at US$66.95 on April 3. Brent futures settled at US$70.14 a barrel on April 3, down 6.42 per cent.

Hours after Mr Trump’s deluge of tariffs created fresh doubts about the outlook for the global economy, Opec+ tripled a planned output hike for May in what delegates described as a deliberate effort to drive down prices to punish the group’s cheats. 

The two moves sent shockwaves across oil markets, though potentially offer a win for Mr Trump, who has repeatedly bemoaned high crude prices.

While falling oil prices could ease inflationary pressures for central banks, they also underscore a wider concern about the outlook for growth that has led firms across the industry to slash their forecasts in recent weeks. 

“The perfect bearish cocktail has been mixed in Washington and in Vienna,” said Mr Tamas Varga, an analyst at brokerage PVM Oil Associates.

“The reciprocal tariffs on virtually every salient US trading partner justifiably raise the fears of recession and possibly stagflation. Economic and oil demand growth is adversely impacted.”

“The economy and oil demand are inextricably linked,” said Ms Angie Gildea, KPMG US energy leader.

“Markets are still digesting tariffs, but the combination of increased oil production and a weaker global economic outlook puts downward pressure on oil prices – potentially marking a new chapter in a volatile market.”

Oil prices were already trading around 4 per cent lower prior to the Opec+ meeting, with investors worried Mr Trump’s tariffs would escalate a global trade war, curtail economic growth and limit fuel demand.

Mr Trump on April 2 unveiled a 10 per cent minimum tariff on most goods imported to the US, the world’s biggest oil consumer, with much higher duties on products from dozens of countries.

Imports of oil, gas and refined products were exempted from the new tariffs, the White House said on April 2.

UBS analysts on April 2 cut their oil forecasts by US$3 per barrel over 2025-2026 to US$72 per barrel.

Traders and analysts now expect more price volatility in the near term, given the tariffs may change as countries try to negotiate lower rates or impose retaliatory levies.

Further weighing on market sentiment, US Energy Information Administration data on April 2 showed US crude inventories rose by a surprisingly large 6.2 million barrels last week, against analysts’ forecasts for a decline of 2.1 million barrels. BLOOMBERG, REUTERS