Oil prices plunged this week as a one-two punch of sweeping U.S. import tariffs and an unexpected OPEC+ supply hike erased $10 per barrel from global benchmarks.
The price slump in crude oil that began last week has extended into this one as market players’ fears about a global recession deepen.
At the time of writing, Brent crude was trading at just below $64 per barrel, while West Texas Intermediate was changing hands for $60.54 per barrel, both down by over 2% from Friday’s close.
Last week, crude oil prices took a 7% dive after China announced retaliatory tariffs for U.S. imports, matching the U.S. rate of 34% on top of existing levies. The move was universally seen as bearish for crude oil, hence the effect on prices.
Saudi Arabia slashed its flagship oil price by the most in more than two years, just days after the OPEC+ alliance announced an unexpectedly large output hike.
State producer Saudi Aramco will lower Arab Light crude to its biggest buyers in Asia by $2.30 a barrel for May, according to a price list seen by Bloomberg.
Crude oil prices slumped by 3% earlier this year as traders digested the barrage of tariffs that President Trump unleashed on U.S. trade partners. Between 10% and 34% for the biggest trade partners of the United States, the tariffs are expected to affect demand for pretty much everything, including energy commodities.
The US is threatening to further tighten the screws on Russia. A group of 50 Republican and Democratic senators introduced a sanctions package that would hit the third-largest oil producer and countries that buy its fuel if President Vladimir Putin refuses to engage in good-faith ceasefire negotiations with Ukraine or if he breaches any eventual agreement.
Most market attention at the moment remains focused on Trump’s plan to announce sweeping “Liberation Day” tariffs later on Wednesday, with no details, creating a situation that has the market guessing and preparing to panic over the prospect of a global trade war.
Six people directly involved in physical North Sea oil and derivatives trading said that the heightened volumes bore the hallmarks of a trader having their positions stopped out. The term means that either the trades were closed involuntarily, or that they triggered a preset threshold requiring them to be closed.
As Saudi Arabia pushes ahead with its ambitious Vision 2030 plan to build huge futuristic cities and resorts, the world’s top crude oil exporter will need to borrow more money on the debt markets as oil prices continue to linger at levels of about $20 per barrel lower than the Saudi fiscal breakeven oil price.
It is quite unsurprising to get such a warning from a central bank that, like other state financial institutions, quite unsurprisingly follows commodity market forecasts. Such behavior is even less surprising from the central bank of one of the world’s largest oil producers. Moreover, Russian budget drafters tend to be conservative in their oil price estimates traditionally, so the central bank is likely to also err on the side of caution. In fact, the bank forecast the average price of Brent crude this year at $60 per barrel in a recent update. That’s down from $68 per barrel for 2024 and $60 for both 2026 and 2027.
Oil prices rallied in Wednesday’s session, a day after U.S. President Donald Trump announced that any country that buys oil or gas from Venezuela will pay a 25% secondary tariff on trades with the United States. Trump claims that Venezuela has sent “tens of thousands” of people to the U.S. who have a “very violent nature.” Brent crude for May delivery gained 1.2% to trade at $73.89 per barrel at 11.30 am ET while the comparable WTI crude contract climbed 1.2% to $69.84.
The secondary tariffs will target China, India, Spain, Italy and Cuba–all major buyers of Venezuelan oil. The tariffs could disrupt global oil supply chains, with U.S. oil companies likely to emerge as key beneficiaries of Venezuela’s customers looking for alternative supplies.