Oil prices dropped by more than 2% on Thursday following an escalation in US-China trade tensions and renewed fears of a global economic slowdown.
The decline reversed gains made a day earlier after a temporary tariff suspension was announced by US President Donald Trump, according to Reuters.
As of 1027 GMT, Brent crude futures had fallen by $1.55, or 2.37%, to $63.93 per barrel. US West Texas Intermediate (WTI) crude futures were down $1.51, or 2.42%, at $60.84.
The price movement came a day after both benchmarks surged nearly 4% following the announcement of a 90-day suspension of reciprocal tariffs on most countries. The relief, however, did not extend to China.
Instead, the US raised its tariff rate on Chinese imports to 125%, up from 104%. This prompted retaliatory measures from China, which imposed an 84% tariff on US goods starting Thursday.
The intensifying trade conflict between the world’s two largest economies raised concerns about long-term pressure on global oil demand.
During Wednesday’s session, prices had fallen by as much as 7% before ending the day around 4% higher, Reuters reported. The volatility highlighted how sensitive oil markets remain to geopolitical and economic developments.
Ashley Kelty, analyst at Panmure Liberum, said ongoing trade disputes have continued to generate uncertainty regarding the demand outlook. Kelty added that pricing remains under downward pressure amid heightened market volatility.
Ole Hansen, head of commodity strategy at Saxo Bank, stated that global markets are navigating one of the most restrictive trade environments in decades.
Hansen, has been quoted by the news agency, as saying: “With a lot of uncertainty still existing, the prospect for a major rebound in crude is not possible at this stage when the market has to deal with the risk of weakening demand and rising production from OPEC.”
ANZ Research analysts also flagged the potential impact of a broader economic downturn on oil prices. While noting that a global recession is not their base case, they suggested Brent could find support at $50 per barrel in a more adverse scenario.
Supply concerns further contributed to the bearish sentiment. The US Energy Information Administration reported a crude stockpile increase of 2.6 million barrels for the week ending 4 April, nearly double the 1.4 million-barrel build forecast in a Reuters poll.
In a research note dated 8 April, Goldman Sachs outlined risk scenarios in the event of a global economic contraction and a collapse in OPEC+ output discipline. Under such conditions, the firm projected Brent could fall below $40 per barrel. In a moderate recession scenario, Brent was forecast to decline to $58 by December 2025 and to $50 by the end of 2026.
A separate note from Goldman Sachs, dated 7 April and authored by Yulia Grigsby and others, projected that Brent prices could approach $40 per barrel by late 2026 if both global GDP slowed significantly and OPEC+ members failed to maintain production targets.
