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Oil tanks to multiyear lows as trade war escalates, cratering demand fears rise - YAHOO FINANCE
Oil futures touched multiyear lows on Friday after China retaliated against Trump administration tariffs, deepening fears of cratering demand amid a full-blown trade war.
West Texas Intermediate (CL=F), the US benchmark, fell more than 7% to settle at $61.99 per barrel while Brent (BZ=F) futures dropped more than 6% to settle at $65.58. The last time crude traded at these levels was in 2021.ina announced it will slap additional tariffs of 34% on US goods in reaction to President Trump's levies announced on Wednesday afternoon, including increased duties on China-made imports.
Trump's tariffs sent financial markets reeling, with crude sinking more than 6% on Thursday as traders assessed the impact of a trade war on demand.
"The tariffs, if they stay in place, would be a big hit to the US and global growth, likely pushing the US and global economy into recession this year," wrote JPMorgan's Natasha Kaneva on Friday morning.
Energy-related equities (XLE) were set to extend losses after leading the market lower on Thursday with sell-offs in the Dow (^DJI), S&P 500 (^GSPC), and Nasdaq (^IXIC).
Crude losses accelerated on Thursday after the Organization of Petroleum Exporting Countries and its allies, OPEC+, agreed to hike supply about three times more than expected beginning in May.
“Markets are still digesting tariffs, but the combination of increased oil production and a weaker global economic outlook puts downward pressure on oil prices — potentially marking a new chapter in a volatile market," KPMG US energy leader Angie Gildea said on Thursday morning.
Although energy was exempt from the levies announced on Wednesday, the move escalated Trump's global trade war, which could hurt oil demand. In a note to clients on Thursday evening, Goldman Sachs analysts lowered their oil forecast for 2025.
"We are reducing our Dec25 Brent and WTI forecasts by $5 to $66/62 because the two key downside risks we have flagged are realizing, namely tariff escalation and somewhat higher OPEC+ supply," the analysts wrote.
Ines Ferre is a Senior Business Reporter for Yahoo Finance. Follow her on X at @ines_ferre.
