Oil prices plunged to even deeper four-year lows on Wednesday after China announced additional tariff measures on U.S. goods in retaliation against President Donald Trump’s tariff policy.
China will impose 84% tariffs on U.S. goods from Thursday, up from the previously announced 34%, the finance ministry said.
Brent futures dropped by $4.02, or 6.40%, to $58.80 a barrel by 1153 GMT. U.S. West Texas Intermediate crude futures were down $4.03, or 6.76%, at $55.55.
Both contracts lost about 7% before paring losses.
Trump’s 104% tariffs on China kicked in from 12:01 a.m. EDT (0401 GMT) on Wednesday, adding 50% to tariffs after Beijing failed to lift its initial retaliatory tariffs on U.S. goods.
Oil prices recover slightly
European Union countries, meanwhile, are expected to approve the bloc’s first countermeasures against Trump’s tariffs on Wednesday, adding to China and Canada’s retaliatory measures.
“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, stronger stimulus to boost domestic consumption could mitigate the losses.”
Brent and WTI have fallen for five sessions since Trump announced sweeping tariffs on most imports, prompting concerns over economic growth and demand for fuel.
“Some U.S. analysts suggested that the White House wants to drive oil prices closer to $50 as the administration believes that the U.S. oil and gas industry can survive a period of disruption,” said Panmure Liberum analyst Ashley Kelty.
“We see this goal as somewhat delusional … and (it) will merely see U.S. production shut in and open the door for OPEC to reclaim its position as the swing producer.”
Exacerbating oil’s decline was a decision last week by the OPEC+ group of producers to raise output in May by 411,000 barrels per day (bpd), which analysts say is likely to push the market into surplus.
Goldman Sachs now forecasts that Brent and WTI could edge down to $62 and $58 a barrel respectively by December 2025 and to $55 and $51 by December 2026.
As oil prices sank, Russia’s ESPO Blend price fell below the $60 a barrel Western price cap for the first time on Monday.
In one positive sign for demand, data from the American Petroleum Institute industry group showed that U.S. crude inventories fell by 1.1 million barrels in the week ending April 4, compared with expectations in a Reuters poll for a build of about 1.4 million barrels.
Official inventory data from the Energy Information Administration is due on Wednesday at 10:30 a.m. EDT (1430 GMT).
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