Oil prices fell by over 3% on Thursday after U.S. President Donald Trump announced sweeping new tariffs which investors worry will enflame a global trade war that will curtail economic growth and limit fuel demand.
Brent futures were down $2.66, or 3.55%, to $72.29 a barrel by 0918 GMT. U.S. West Texas Intermediate crude futures were down $2.69, or 3.75%, to $69.02.
Trump on Wednesday unveiled a 10% minimum tariff on most goods imported to the United States, the world’s biggest oil consumer, with much higher duties on products from dozens of countries, initiating a global trade war that threatens to drive up inflation and stall U.S. and worldwide economic growth.
“The U.S. tariff announcement clearly caught markets off guard. Pre-announcement speculation suggested a flat 15-20% tariff, but the final decision was more hawkish,” Yeap Jun Rong, market strategist at IG, said in an email.
“For oil prices, the focus now shifts to the global growth outlook, which is likely to be revised downward due to these higher-than-expected tariffs,” he added.
Imports of oil, gas and refined products were exempted from the new tariffs, the White House said on Wednesday.
UBS analysts on Wednesday cut their oil forecasts by $3 per barrel over 2025-26 to $72 per barrel, citing weaker fundamentals.
Traders and analysts now expect more price volatility in the near term, as the tariffs may change as countries try to negotiate lower rates or impose retaliatory levies.
“Countermeasures are imminent and judging by the initial market reaction, recession and stagflation have become terrifying possibilities,” said PVM analyst Tamas Varga.
“As tariffs are ultimately paid for by domestic consumers and businesses, their cost will inevitably increase impeding the rise in economic wealth.”
In other news, U.S. Energy Information Administration data on Wednesday showed U.S. crude inventories rose by a surprisingly large 6.2 million barrels last week, against analysts’ forecasts for a decline of 2.1 million barrels. [EIA/S]
Market participants are also awaiting the outcome of an OPEC+ meeting on Thursday, which will discuss Kazakh output.
