Oil Extends Steep Selloff as Fresh Tariff Wave Imperils Demand

(Bloomberg) -- Oil sank to a fresh four-year low as an intensifying global trade war threatens to batter energy demand, with a fresh wave of levies going into effect.

Brent sank as much as 4.2% to drop toward $60 a barrel, as West Texas Intermediate fell for a fifth day. US President Donald Trump’s so-called reciprocal tariffs are now in place, dealing a heavy blow to the world economy, raising the risk of further retaliation and stoking fears of a recession.

Crude has collapsed by almost a fifth this year as US President Donald Trump’s aggressive trade agenda has eviscerated appetite for risk assets, with oil joining other commodities and equities in a swift and deep global market slump. The losses have been compounded by a decision by OPEC+ to loosen output curbs at a faster clip than previously expected. The one-two punch has spurred concerns that the oil market will be saddled with a glut.

“Tariff escalation continues to sour the global growth outlook, leaving further downside risk to oil demand,” said Warren Patterson, head of commodities strategy at ING Groep NV in Singapore. “With no signs of de-escalation, risks remain skewed to the downside.”

As midnight passed in the eastern US, the Trump administration pushed ahead with higher duties on roughly 60 trading partners. Most critically, the moves included what amounts to a 104% duty on many Chinese goods, imposed after Beijing hit back at the US with its own charges.

“Assuming China does not announce another round of counter-tariffs, then Brent should just be able to hold above $60,” said Robert Rennie, head of commodity and carbon research at Westpac Banking Corp. “However, if we see another round of retaliation, then another leg lower through $60 looks likely.”

Key market metrics point to fast-loosening conditions. Among them, the spread between Brent for this coming December and the same month in 2026 has plunged into contango, a bearish pattern in which the nearer-dated contract trades at a discount to the longer-dated one. Other portions of the futures curve are also in contango.

Elsewhere, crude options are at their most bearish since late 2021, as of Tuesday’s close, while a gauge of implied volatility has rocketed higher.

While the bulk of Trump’s tariffs, as well as retaliatory levies from other nations, threaten to stoke inflation by making goods more costly, oil’s collapse — plus associated declines in products such as diesel — will offset some of that process. So far in April, US gasoline futures have sunk about 16%.

©2025 Bloomberg L.P.