Oil tumbled to the lowest in four years, following a surprise output increase by OPEC+ and a rapidly escalating global trade war that’s also rattling commodities markets from metals to gas.
Oil’s rout was triggered Thursday by a deluge of tariffs from US President Donald Trump, which threaten both global economic growth and consumption. Hours later, OPEC+ tripled a planned output hike for May, in what delegates called a deliberate effort to drive down prices to punish members pumping above their quota.
Benchmark Brent has lost 14% in just two days — falling below $65 a barrel — while US futures have also hit the lowest since 2021. The losses were exacerbated on Friday by China’s retaliation against US duties, worsening a trade war that’s threatening the global economy and demand for raw materials. Beijing will impose a 34% tariff on all imports from the US starting April 10.
Other commodities also slumped as broader financial markets took a hit. Copper slid as much as 5.1% to the lowest since January, while benchmark European natural gas futures tumbled almost 10%. Glencore Plc plunged 11%, with fellow major miners BHP Group and Rio Tinto Group also sliding.
Oil’s retreat marks a fresh attempt to break out of the $15 trading range of the past six months. During that period, OPEC+ supply curbs were seen to put a floor under the market, while the group’s ample spare capacity acted as a ceiling. This week’s unexpected production increase raises questions about whether the alliance will continue to defend higher prices.
The dual hit from OPEC+ and tariffs has prompted a rush by traders and Wall Street banks to reassess their outlook for the market. Goldman Sachs Group Inc. and ING Groep NV are among those lowering their price forecasts, citing risks to demand and higher supplies from the producer group.
“The two key downside risks we have flagged are realizing: namely tariff escalation and somewhat higher OPEC+ supply,” Goldman analysts including Daan Struyven wrote in a note. “Price volatility is likely to stay elevated on higher recession risk.”
The pullback has also had a broader impact on key market gauges. Timespreads softened in a sign of expected looser balances, particularly further along the futures curve. At the same time, bearish oil options volumes soared to the highest level on record.
Still, wider supply risks remain. The Trump administration has threatened a maximum-pressure policy on oil-producing nations that are subject to US sanctions, including Iran and Venezuela. Any retreat in prices offers a bigger opportunity to restrict output in those nations without having an inflationary price spike.
“With potential supply disruptions stemming from sanctions and tariffs — on both sellers and buyers — oil prices are unlikely to stay below $70 for long,” said Mukesh Sahdev, global head of commodity markets at Rystad Energy.
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