Oil prices plunged on Thursday after the announcement of U.S. protectionist measures by President Donald Trump, triggering fears over the potential impact on global economic growth and oil demand. Adding to the downward pressure, OPEC revealed a larger-than-expected increase in production.
By 12:05 GMT (14:05 Paris time), Brent crude for June delivery had dropped 5.67% to $70.70 per barrel, while West Texas Intermediate (WTI) for May delivery fell 6.05% to $67.37.
Although energy products are exempt from the new tariffs, they remain highly sensitive to economic downturns, noted Arne Lohmann Rasmussen of Global Risk Management. “The tariff announcements were far worse than expected,” he said, adding that this has “heavily impacted” markets and driven oil prices lower.
The protectionist measures, the most significant since the 1930s, include a baseline 10% tariff on all imports, with higher duties imposed on nations considered particularly hostile in trade. China, the world’s largest oil importer, is hit hardest, facing an additional 34% import tax on its products, stacking onto the existing 20% tariff.
Analysts are closely monitoring retaliatory actions from affected countries, which could further weaken the oil market.
Meanwhile, OPEC had announced on Thursday a surprise production increase starting in May. OPEC+ will boost output by 411,000 barrels per day in May 2025, significantly faster than the gradual increase previously planned by eight members of the cartel.
This production boost is further weighing on oil prices, with analysts initially expecting a more modest increase of 137,000 barrels per day, similar to April’s adjustment. “This certainly adds extra pressure to the market, creating a double effect,” said Ole R. Hvalbye, a senior analyst at SEB (Skandinaviska Enskilda Banken), a Swedish financial services group.
Hvalbye also noted that OPEC+ seems to be more influenced by political considerations, particularly as President Donald Trump had previously pressured the group to ramp up oil production.
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