Oil Prices Tumble 2% as Trump’s Tariff Threats Ignite Global Trade War Concerns

By: Aditi

Published on: Apr 08, 2025

Oil markets faced another volatile session on Monday as President Donald Trump’s threat of additional 50% tariffs on Chinese goods sent shockwaves through global markets. West Texas Intermediate (WTI) crude futures (CL=F) briefly plunged below $60perbarrelforthefirst\; time\; since2021,whileBrentcrude(BZ=F),theinternationalbenchmark,droppedto$64.21. The sell-off, which extended last week’s 11% collapse, reflects growing fears of a full-blown trade war between the U.S. and China—and its devastating impact on global oil demand.

Trump’s Tariff Escalation Roils Markets

President Trump’s latest tariff announcement—a 50% levy on Chinese imports unless Beijing withdraws its retaliatory 34% duties—triggered a domino effect across financial markets. Stocks swung wildly, with the S&P 500 (^GSPC), Dow Jones (^DJI), and Nasdaq (^IXIC) oscillating between gains and losses. A brief rally fueled by rumors of a 90-day tariff pause was quickly dashed when the White House dismissed the reports as “fake news.”

Key Developments:

• Oil’s 11% Weekly Loss: Crude prices have plummeted since Trump unveiled sweeping tariffs on April 2, exempting energy but sparking fears of a global recession.


• China’s Retaliation: Beijing’s 34% tariffs on U.S. goods, announced Friday, intensified concerns over reduced industrial activity and oil consumption in the world’s largest crude importer.


• **Gold Dips Below $3,000:\ast \ast Safe-havengold(GC=F)brieflyfellbelow$3,000/oz as investors grappled with mixed signals about economic stability.

OPEC+ Production Hike & Saudi Price Cuts Deepen Glut Fears

The oil sell-off accelerated after Saudi Arabia slashed its May crude export prices to Asian buyers by $2.30 per barrel—a strategic move coinciding with OPEC+’s decision to boost production by over 400,000 barrels per day (bpd) starting in May. This output hike, triple the group’s earlier signals, has raised concerns about oversupply amid weakening demand.

Analyst Insights:

• **Citi’s $60Floor:\ast \ast CitianalystsnotedthatOPEC+nationsandU.S.shaleproducershaveavestedinterestindefendingthe$60/WTI level to protect fiscal budgets and domestic energy economics.


• Goldman Sachs’ Downgrade: The bank lowered its 2025 Brent forecast to 62andWTIto62andWTIto58, citing stagflation risks from tariff-driven GDP downgrades.

Energy Stocks Bear the Brunt of Trade War Angst

The energy sector (XLE) has emerged as one of the hardest-hit industries since Trump’s tariff announcement. Shares of ExxonMobil (XOM), Chevron (CVX), and Halliburton (HAL) have tumbled as investors price in lower earnings from depressed crude prices.

Market Reactions:

• Thursday’s 7% Plunge: WTI crashed last Thursday after China’s tariff plans surfaced, despite OPEC+’s earlier pledge to stabilize markets.


• JPMorgan’s Recession Warning: Economist Natasha Kaneva warned sustained tariffs could push the U.S. and global economy into recession by late 2025.

Will $60 Oil Hold? Analysts Weigh In

While bearish sentiment dominates, some experts see a potential floor forming:

1. OPEC+ Intervention: Cartel members, reliant on oil revenues to fund national budgets, may intervene if prices approach 55–55–60.


2. U.S. Shale Resilience: With breakeven prices near $50, American producers could slow drilling—tightening supply.


3. Strategic Reserves: The U.S. Department of Energy might halt releases from the SPR (Strategic Petroleum Reserve) to avoid undercutting domestic drillers.

Goldman Sachs: “Stagnating U.S. Growth” Threatens Oil Demand

In a Sunday note, Goldman Sachs’ Daan Struyven highlighted the tariff-driven slowdown in U.S. manufacturing and consumer spending. “The dual shock of trade barriers and higher interest rates could reduce global oil demand by 1.2 million bpd in 2025,” he warned.

What Trump’s Tariffs Mean for Consumers

While energy was exempted from initial tariffs, the indirect effects are already surfacing:

• Gas Prices: U.S. pump prices have dipped 8% in a week, offering short-term relief but risking long-term job losses in energy sectors.


• Inflation Risks: Tariffs on Chinese electronics and machinery could raise production costs, offsetting oil’s decline.

Historical Parallels: 2018–2024 Trade Wars

This isn’t the first time Trump’s tariffs have rattled markets:

• 2018–2019: U.S.-China tensions erased $1.7 trillion from global stocks and cut oil demand growth by 0.5%.


• 2022–2024: Post-pandemic supply chain tariffs pushed Brent to $50 amid lockdown-driven demand crashes.

The Path Ahead: Recession or Recovery?

Market watchers are split on whether the sell-off is overdone:

• Bull Case: A swift U.S.-China tariff truce could revive oil demand, with Brent rebounding to $70.


• Bear Case: Protracted trade disputes may push WTI to $50, forcing OPEC+ into emergency cuts.

Conclusion: Navigating the Oil Market Storm

With Trump’s tariffs and OPEC+ output hikes creating unprecedented volatility, investors should brace for further turbulence. Key indicators to watch include:

• U.S.-China trade negotiations


• Weekly EIA crude inventory reports


• Federal Reserve interest rate decisions