Oil prices extended their losing streak on Wednesday, falling for a fifth consecutive session as newly enforced U.S. tariffs reignited global trade tensions. Brent crude slipped 3.34% to $60.72 per barrel, while West Texas Intermediate (WTI) dropped 3.42% to $57.54, marking their lowest levels since February 2021.
Both benchmarks fell as much as 4% during early trading before trimming some losses. The steep declines followed the implementation of a 104% cumulative tariff on Chinese imports, a move by U.S. President Donald Trump aimed at pressuring Beijing into removing retaliatory duties.
This aggressive trade policy stoked fears of a significant slowdown in global economic activity, with energy demand likely to be among the first casualties. Analysts now question the administration’s strategy, which some believe targets a short-term drop in oil prices to near $50 per barrel.
Market Reacts to New Tariff Shock
The White House’s trade escalation comes amid a broader effort to rebalance global supply chains, but its immediate effect on commodities has been stark.
Highlights from the latest tariff action:
- 104% cumulative tariff on Chinese goods (includes a new 50% hike)
- EU poised to approve retaliatory measures, following moves by Canada and China
- China refuses to lift its 34% retaliatory levy, calling U.S. actions “blackmail”
Ashley Kelty, an energy analyst at Panmure Liberum, described the strategy as misguided:
“We see this goal as somewhat delusional… It will merely see U.S. production shut in and open the door for OPEC to reclaim its position as the swing producer.”
Meanwhile, Beijing has vowed to resist U.S. pressure, setting the stage for a prolonged and costly standoff. The uncertainty has spooked investors, prompting a flight from risk assets, including oil.
Demand Outlook Clouds Further
Despite the downbeat mood, there was one data point offering a glimmer of support for prices. According to the American Petroleum Institute, U.S. crude inventories fell by 1.1 million barrels last week—surprising analysts who had expected a build of 1.4 million barrels.
Still, the modest drawdown was not enough to offset demand concerns. The official Energy Information Administration report, due at 10:30 a.m. EDT, may provide further clarity.
For now, the market is focused on how long producers can withstand depressed prices before cutting back supply. Until there’s resolution on the trade front, oil may remain under pressure.
Conclusion:
The sharp drop in oil underscores just how vulnerable energy markets are to geopolitical shocks. With Trump’s tariff push intensifying and retaliation looming, crude could face further downside in the days ahead.
