HOUSTON: Oil prices fell on Thursday as the decision by the OPEC+ group to speed up its unwinding of oil output cuts in May compounded already heavy losses following U.S. President Donald Trump’s announcement of sweeping new tariffs.
Brent futures were down $5.33, or 7.11%, at $69.62 a barrel by 1504 GMT. U.S. West Texas Intermediate crude futures were down $5.59, or 7.80%, at $66.12.
Brent was on course for its worst percentage drop since August 1, 2022, and WTI its worst since July 11, 2022.
“Obviously, there’s a lot of fear and moaning this morning,” said Phil Flynn, senior analyst with Price Futures Group. “A lot of people didn’t think Trump would go through with it and he did.”
At a ministers’ meeting on Thursday, OPEC+ countries agreed to advance their plan for oil output hikes, now aiming to return 411,000 barrels per day to the market in May, up from 135,000 bpd initially planned.
Oil down amid rising US crude inventories
“The economy and oil demand are inextricably linked,” said Angie Gildea, KPMG U.S. energy leader.
“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.”
Oil prices were already trading some 4% lower prior to the meeting, as investors reacted to Trump’s tariffs with concerns that they would escalate a global trade war, curtailing economic growth and limiting fuel demand.
Trump on Wednesday unveiled a 10% minimum tariff on most goods imported to the United States, the world’s biggest oil consumer, with much higher duties on products from dozens of countries.
Imports of oil, gas and refined products were exempted from the new tariffs, the White House said on Wednesday.
UBS analysts on Wednesday cut their oil forecasts by $3 per barrel over 2025-26 to $72 per barrel.
Traders and analysts now expect more price volatility in the near term, given the tariffs may change as countries try to negotiate lower rates or impose retaliatory levies.
“Countermeasures are imminent and judging by the initial market reaction, recession and stagflation have become terrifying possibilities,” said PVM analyst Tamas Varga.
“As tariffs are ultimately paid for by domestic consumers and businesses, their cost will inevitably increase, impeding the rise in economic wealth.”
Further weighing on market sentiment, U.S. Energy Information Administration data on Wednesday showed U.S. crude inventories rose by a surprisingly large 6.2 million barrels last week, against analysts’ forecasts for a decline of 2.1 million barrels.
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