In early trading on Wednesday, oil prices experienced a significant decline, reaching their lowest levels in over four years. This downturn is attributed to growing concerns over demand, exacerbated by an intensifying tariff conflict between the United States and China, the two largest economies globally, alongside an increasing supply forecast. Brent futures experienced a decline of $2.13, representing a 3.39% drop, settling at $60.69 per barrel as of 0108 GMT. West Texas Intermediate crude futures in the U.S. experienced a decline of $2.36, representing a 3.96% drop, bringing the price down to $57.22. Brent crude prices have reached their lowest levels since March 2021, while West Texas Intermediate (WTI) has hit its lowest point since February 2021. Both benchmarks have experienced a decline over five consecutive sessions following the announcement by U.S. President Donald Trump regarding sweeping tariffs on most imports. This development has raised concerns that a global trade war could negatively impact economic growth and reduce fuel demand.

The United States is set to implement a staggering 104% tariff on imports from China, effective at 12:01 a.m. EDT (0401 GMT) on Wednesday. This announcement was made by a White House official during a briefing on Tuesday, who noted that the increase represents an additional 50% on tariffs following China’s failure to remove its retaliatory tariffs on U.S. products by the noon deadline imposed by President Trump on Tuesday. The United States is set to implement a staggering 104% tariff on imports from China, effective at 12:01 a.m. EDT (0401 GMT) on Wednesday. This announcement was made by a White House official during a briefing on Tuesday, indicating a 50% increase in tariffs following China’s failure to remove its retaliatory tariffs on U.S. products by the noon deadline established by President Trump on Tuesday.

Beijing has firmly stated its intention to resist what it describes as U.S. blackmail, following President Trump’s warning of a potential 50% tariff increase on Chinese goods unless China removes its 34% retaliatory tariff. “China’s assertive response reduces the likelihood of a swift agreement between the two largest economies, raising increasing concerns about a potential global economic downturn,” stated Ye Lin, vice president of oil commodity markets at Rystad Energy. “China’s assertive response reduces the likelihood of a swift agreement between the world’s largest economies, raising increasing concerns about a potential global economic downturn,” stated Ye Lin, vice president of oil commodity markets at Rystad Energy.

“According to her, China’s oil demand growth, projected between 50,000 bpd and 100,000 bpd, faces significant risks if the trade war persists. However, she noted that a robust stimulus aimed at enhancing domestic consumption could help offset potential losses.” Last week, OPEC+, which includes the Organization of the Petroleum Exporting Countries and its allies such as Russia, made a significant decision to increase output in May by 411,000 barrels per day. Analysts suggest that this move is poised to lead the market into a surplus, further exacerbating the decline in oil prices.

Goldman Sachs has revised its projections, indicating that Brent and WTI crude oil prices may decline to $62 and $58 per barrel, respectively, by December 2025. Furthermore, the forecast suggests a further drop to $55 and $51 per barrel by December 2026. In a significant development, Russia’s ESPO Blend oil price has dipped below the $60 per barrel threshold set by Western price caps for the first time, following a decline in oil prices observed on Monday.

In a noteworthy development for market demand, recent data released by the American Petroleum Institute indicates that U.S. crude inventories experienced a decline of 1.1 million barrels for the week ending April 4. This figure contrasts with the expectations from a Reuters poll, which anticipated an increase of approximately 1.4 million barrels.