Oil Sinks 4% as US Kicks Off 104% Tariffs on China

NOLAN, TEXAS - APRIL 08: An oil pumpjack is seen in a field on April 08, 2025 in Nolan, Texas. Brandon Bell/Getty Images/AFP

Oil prices dropped to their lowest in more than four years on Wednesday on looming demand concerns fueled by an escalating tariff war between the US and China, the world's two biggest economies, and a rising supply outlook.
Brent futures lost $2.38, or 3.79%, to $60.44 a barrel as of 0423 GMT. US West Texas Intermediate crude futures fell $2.46, or 4.13%, to $57.12. Both contracts touched their lowest level since February 2021.
The six-month spread for Brent <LCOc1-LCOc7> slumped to 79 cents, its lowest level since mid-November, as the market was seen moving into a potential surplus. The spread has collapsed 86% from a high of $5.69 on January 15 that reflected tightening supply and expectations of a revival in Chinese demand.
Both Brent and WTI have tumbled over the five consecutive sessions since US President Donald Trump announced sweeping tariffs on most imports sparking concerns a global trade war would dent economic growth and hit fuel demand, Reuters reported.
Trump's 104% tariffs on China kicked in from 12:01 a.m. EDT (0401 GMT) on Wednesday, adding 50% more to tariffs after Beijing failed to lift its retaliatory tariffs on US goods by a noon deadline on Tuesday set by Trump.
Beijing vowed not to bow to what it called US blackmail after Trump threatened the additional 50% tariff on Chinese goods if the country did not lift its 34% retaliatory levy.
"China’s aggressive retaliation diminishes the chances of a quick deal between the world’s two biggest economies, triggering mounting fears of economic recession across the globe," said Ye Lin, vice president of oil commodity markets at Rystad Energy.
"China’s 50,000 bpd to 100,000 bpd of oil demand growth is at risk if the trade war continues for longer, however, a stronger stimulus to boost domestic consumption could mitigate the losses," she said.