By Seun Ibiyemi
Global oil prices plunged to their lowest levels since early 2021 on Wednesday, amid growing concerns over a supply glut and weakening demand from major economies.
The sharp downturn comes just as U.S. President Donald Trump unexpectedly announced a suspension of newly imposed tariffs on Chinese goods, in a bid to deescalate mounting trade tensions.
Brent crude dropped by $2.38 (3.79 per cent), settling at $60.44 per barrel, while U.S. West Texas Intermediate (WTI) fell $2.46 (4.13 per cent) to $57.12—both hitting lows not seen in over four years.
The declines marked the fifth consecutive session of losses and one of the steepest weekly falls this year.
The oil market had been roiled by fears of an escalating trade war between the world’s two largest economies, following the U.S. decision to raise tariffs on a wide range of Chinese imports from 54 per cent to 104 per cent. China quickly responded with threats of retaliation, calling Washington’s move “blackmail.”
However, in a surprise late-night statement, President Trump reversed course, announcing a temporary halt to the tariff hike to allow “room for constructive dialogue.”
Despite this shift, market sentiment remained fragile.
“The pause in tariffs is welcome, but the damage has already been done,” said Ye Lin, vice president at Rystad Energy.
She warned that prolonged uncertainty could still dampen Chinese oil demand, which had been expected to grow by up to 100,000 barrels per day this year.
Compounding the bearish outlook, global supply continues to outpace demand. OPEC+ recently announced it would increase output by 411,000 barrels per day beginning in May, further pressuring already saturated markets.
Meanwhile, the Brent futures spread has collapsed to just 79 cents, reflecting expectations of a near-term surplus after being in tighter backwardation earlier this year.
Adding to global jitters, a volatile sell-off in the U.S. Treasury market, compared by analysts to the COVID-era “dash for cash,” has underscored deepening instability in financial markets.
Despite falling equities, bond yields surged sharply, with the 10-year U.S. Treasury yield rising 17 basis points in a single day.
The downturn is also impacting producers beyond the U.S. and OPEC. Russia’s ESPO Blend crude dropped below the $60 Western price cap for the first time, signaling growing pressure on oil-exporting economies.
There was a sliver of good news from the American Petroleum Institute, which reported an unexpected draw of 1.1 million barrels in U.S. crude inventories for the week ending April 4.
The official numbers from the Energy Information Administration are expected to shed more light later Wednesday.
Looking ahead, analysts remain divided. While Goldman Sachs still expects Brent to recover to $62 by the end of 2025, it projects further declines thereafter, with prices dipping to $55 by late 2026.
For now, oil markets remain on edge, buffeted by geopolitical risk, financial volatility, and uncertain demand—leaving any path to recovery precariously unclear.