Crude oil prices continued their sharp decline for the second consecutive day, reaching their lowest level in over three years due to US President Donald Trump’s newly imposed tariffs and an unexpected output increase by OPEC+.
Benchmark Brent crude has dropped more than 10% in just two days, while US crude futures are trading at their lowest levels since 2021. The sharp decline is part of a broader market downturn affecting commodities, including natural gas and agricultural products.
The price slump was triggered on Thursday when the US announced a wave of tariffs, raising concerns over global economic growth and energy demand. Hours later, OPEC+ unexpectedly tripled its planned production hike for May, a move reportedly aimed at penalizing member states exceeding their output quotas.
Crude oil prices fell further on Friday following reports that China imposed a 34% tariff on all US imports in response to Washington’s measures, adding another layer of uncertainty to the market.
For the past six months, oil prices had been fluctuating within a $15 range, with OPEC+ production cuts providing a price floor and the group’s spare capacity acting as a cap. However, this week’s decision to raise output has cast doubt on whether OPEC+ will continue to support higher prices.
The combination of tariffs and increased supply has led major financial institutions, including Goldman Sachs and ING, to revise their oil price forecasts downward, citing increased risks to demand and rising production levels. Analysts warn that price volatility is expected to persist due to heightened recession concerns.
Despite the price drop, broader supply risks remain. The Trump administration has indicated it may intensify pressure on oil-producing nations under US sanctions, such as Iran and Venezuela. Analysts suggest that any further decline in prices could allow the US to restrict production in these nations without causing a sharp inflationary spike.
“With potential supply disruptions caused by sanctions and tariffs—affecting both sellers and buyers—oil prices are unlikely to remain below $70 for long,” said Mukesh Sahdev, global head of commodity markets at Rystad Energy.
