Oil markets faced a brutal correction on Friday, with U.S. crude prices sinking 7.4% to $61.99—marking the lowest close in more than three years. The move followed China’s surprise announcement of a 34% tariff on all U.S. goods, escalating tensions in a trade war that is already weighing on global growth.
Brent crude, the global benchmark, fell $4.56 or 6.5% to settle at $65.58, while West Texas Intermediate (WTI) tumbled $4.96. At their session lows, both benchmarks hit four-year troughs: Brent at $64.03 and WTI at $60.45. For the week, Brent and WTI posted losses of 10.9% and 10.6% respectively—making it the steepest weekly decline for U.S. oil in two years.
Investment banks quickly adjusted their forecasts. Goldman Sachs slashed its December 2025 targets for Brent and WTI by $5, bringing them down to $66 and $62 per barrel. JPMorgan revised its recession probability upward to 60% from 40%, citing worsening trade tensions.
OPEC+ Adds Supply Amid Weak Demand
Compounding the pressure on oil, the OPEC+ alliance surprised markets by accelerating plans to boost production. The group will now add 411,000 barrels per day (bpd) to global supply in May, up from its prior target of 135,000 bpd.
Analysts warn this move may further flood the market, especially as demand expectations waver. HSBC reduced its 2025 oil demand growth forecast to 0.9 million bpd from 1 million, citing the effects of tariffs and increased OPEC+ output.
A Russian court ruling also eased fears of supply disruptions from Kazakhstan. The Caspian Pipeline Consortium’s Black Sea terminal will remain operational, removing a key supply risk from the equation.
Fed, Inflation, and Market Outlook
Federal Reserve Chair Jerome Powell delivered sobering remarks, warning that new U.S. tariffs could reaccelerate inflation while slowing growth. “The economic fallout is likely to be larger than initially anticipated,” Powell said, hinting at a complex path ahead for monetary policy.
Meanwhile, investors continue to digest:
- A 7.4% drop in WTI, marking a $4.96 daily loss
- Goldman Sachs’ revised oil price targets: Brent at $66, WTI at $62
- JPMorgan’s 60% recession probability forecast
Energy specialist Scott Shelton of United ICAP noted, “WTI could fall into the mid-to-high $50s range in the short term.”
As markets brace for further volatility, the trajectory of oil prices remains uncertain—tied closely to geopolitical tensions, central bank policy, and supply dynamics.