Oil prices plunge below $60 as China announces higher tariffs on US goods

Soon after Trump's 104 percent tariff on China came into force, Beijing retaliated with another 50 percent duty on US goods, taking the effective rate to 84 percent

Oil prices on April 9 dipped below $60 after US President Donald Trump's "reciprocal tariffs" came into effect over concerns of weak demand. The prices fell for the 5th straight day, with international benchmark Brent North Sea crude hitting the lowest level in four years.

Brent slumped more than four percent to $59.77 per barrel before recovering slightly, while main US crude contract, WTI, shed 4.3 percent to $57.02.

Soon after Trump's 104 percent tariff on China came into force, Beijing retaliated with another 50 percent duty on US goods, taking the effective rate to 84 percent and intensifying a global trade war.

Brent and WTI have tumbled over the five sessions since US President Donald Trump announced sweeping tariffs on most imports prompting concerns this will dent economic growth and hit fuel demand.

"Some US analysts suggested that the White House wants to drive oil prices closer to $50 as the administration believes that the US oil and gas industry can survive a period of disruption," said Ashley Kelty, analyst at Panmure Liberum

"We see this goal as somewhat delusional ... and (it) will merely see US production shut in and open the door for OPEC to reclaim its position as the swing producer," said Kelty.

Trump's 104 percent tariffs on China kicked in from 12:01 am EDT (0401 GMT) on Wednesday, adding 50 percent to tariffs after Beijing failed to lift its retaliatory tariffs on US goods.

European Union countries are also expected to approve on Wednesday the bloc's first countermeasures against Trump's tariffs, joining China and Canada in retaliating.

Beijing vowed not to bow to what it called US blackmail after Trump threatened the additional 50 percent tariff on Chinese goods if the country did not lift its 34 percent retaliatory levy.

"China's aggressive retaliation diminishes the chances of a quick deal between the world’s two biggest economies, triggering mounting fears of economic recession across the globe," said Ye Lin, vice president of oil commodity markets at Rystad Energy.

"China's 50,000 bpd to 100,000 bpd of oil demand growth is at risk if the trade war continues for longer, however, a stronger stimulus to boost domestic consumption could mitigate the losses," she said.

Exacerbating oil's decline was a decision last week by OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies, including Russia, to raise output in May by 411,000 barrels per day, a move that analysts say is likely to push the market into surplus.

Goldman Sachs now forecasts that Brent and WTI could edge down to $62 and $58 per barrel by December 2025 and to $55 and $51 per barrel by December 2026.

As oil prices sank, Russia's ESPO Blend oil price fell below the $60 per barrel Western price cap level for the first time ever on Monday.

In one positive sign for demand, data from the American Petroleum Institute industry group showed US crude inventories fell by 1.1 million barrels in the week ended April 4, compared with expectations in a Reuters poll for a build of about 1.4 million barrels.

Official inventory data from the Energy Information Administration is due on Wednesday at 10:30 am EDT (1430 GMT).

With agency inputs