Global oil prices tumbled to their lowest in more than four years on Wednesday as fears over weakening demand and a supply glut deepened, driven by a renewed trade standoff between the United States and China—two of the world’s largest oil consumers.
Brent crude futures fell $2.38, or 3.79%, to $60.44 per barrel by 04:23 GMT, while U.S. West Texas Intermediate (WTI) dropped $2.46, or 4.13%, to $57.12 per barrel. Both contracts hit their lowest levels since February 2021 and have declined for five consecutive trading sessions, marking one of the steepest weekly drops this year.
The sharp decline was triggered by fresh U.S. tariffs on Chinese imports, a move that reignited concerns over a prolonged global trade war and its potential to drag down economic growth. The U.S. imposed 104% tariffs—an increase from the previously enforced 54%—on a wide range of Chinese goods starting at 12:01 a.m. EDT (0401 GMT) Wednesday. The decision followed Beijing’s refusal to remove its 34% retaliatory tariffs on American goods.
China, in turn, vowed to resist what it described as “blackmail,” warning of further countermeasures and signaling that the dispute may be far from over.
“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.
She added that China’s oil demand growth, estimated between 50,000 and 100,000 barrels per day, could be at risk if the standoff persists, although domestic stimulus measures might help cushion the blow.
The geopolitical tension comes at a time when the oil market is already grappling with signs of oversupply. The six-month Brent futures spread narrowed to just 79 cents, its lowest level since November, collapsing from a high of $5.69 in mid-January. The steep fall in the spread indicates that traders now expect a near-term supply surplus, a reversal from earlier forecasts of tightening markets driven by rebounding Chinese demand.
Adding to the pressure, OPEC+, which includes members of the Organization of the Petroleum Exporting Countries and allies like Russia, announced a collective output hike of 411,000 barrels per day starting in May. Analysts warn the decision may flood the market further, especially at a time of faltering demand sentiment.
Beyond oil, the broader financial markets are also showing signs of distress. A violent selloff in the $29 trillion U.S. Treasury market, which some analysts compare to the COVID-era “dash for cash,” has sparked renewed fears of fragility in the global financial system. Despite ongoing weakness in equities, government bond yields surged, with 10-year U.S. Treasury yields jumping 17 basis points in a single day—marking one of the largest intraday swings in decades.
Meanwhile, Russia’s ESPO Blend crude slipped below the $60 per barrel Western price cap for the first time, highlighting the broader impact of the global downturn on oil-exporting nations.
There were, however, pockets of relief. The American Petroleum Institute reported a surprise drawdown of 1.1 million barrels in U.S. crude inventories for the week ended April 4, defying expectations of a 1.4-million-barrel build. Official figures from the U.S. Energy Information Administration are due 10:30 am Wednesday and could provide further clarity.
Despite the current turbulence, some analysts remain cautiously optimistic. Goldman Sachs forecasts Brent could recover to $62 by December 2025 and WTI to $58, although it projects further declines by the end of 2026, down to $55 and $51 per barrel, respectively.
For now, the combination of geopolitical tension, market volatility, and supply concerns appears to be steering oil prices into uncertain territory, with little sign of stability on the horizon.
