On April 4, international crude oil futures plummeted. The settlement price of the main contract of US WTI crude oil futures was $61.99 per barrel, down $4.96 or 7.4%. The settlement price of the main contract of Brent crude oil futures was $65.58 per barrel, down $4.56 or 6.5%. Affected by the US tariff policy, oil prices plummeted for two consecutive trading days, and WTI fell by nearly $10. Investors are concerned about the risk of economic recession caused by the escalation of global trade conflicts.

US tariff policy triggers oil market collapse

The US tariff policy has landed, and the tax rate has been raised to an unprecedented high. As many countries prepare to take retaliatory measures, the global capital market has ushered in a huge shock. On April 3, Beijing time, the global market began to plummet across the board. After my country announced its countermeasures on Friday, U.S. stocks continued to plummet. As of the close of trading on April 4, Eastern Time, the Dow Jones Industrial Average plummeted by more than 2,200 points, a drop of 5.50%; the Nasdaq plummeted by 5.82%, more than 20% from its historical high; and the S&P 500 plummeted by 5.97%. Nearly $6.5 trillion evaporated from the U.S. stock market in two days. Risk assets other than the stock market also began to plummet. Crude oil can be said to be the hardest hit area, falling by more than 10% in two days from April 3 to 4. WTI crude oil hit a new low since March 2021. As of press time on April 7, crude oil had fallen below the $60 mark during the session.

The fundamental reason for the decline in crude oil is the tariff trade war launched by Trump. Tariff trade barriers have brought huge shocks to the global economy and increased uncertainty in the future. The market believes that the risk of the United States falling into a recession is increasing, and this will have a huge negative impact on global economic growth. Then it will bite back to global total demand, which will have a far-reaching impact on crude oil as the blood of industry.

OPEC+'s decision to increase production deepened the decline in oil prices

In addition, the Organization of Petroleum Exporting Countries and its allies (OPEC+) announced future production increases, which also had a negative impact on crude oil. On April 3, OPEC+ made a decision to advance the production increase plan at a video conference. The alliance's current goal is to increase production by 411,000 barrels per day in May, compared with a previous plan of 135,000 barrels per day. Although this was a decision based on previous market judgments, its release at this time point has exacerbated the decline in crude oil.

Market outlook:

Crude oil analysts at SunSirs believe that based on the subsequent impact of the current US tariff policy, crude oil may enter a new cycle in the long term. The balance between supply and demand may be broken and re-enter the process of rebalancing. In the short term, given that countries are trying to negotiate lower tariffs or impose retaliatory tariffs, tariffs may change, and oil prices may fluctuate more sharply in the short term.

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