On April 3, oil prices fell after US President Donald Trump announced new tariffs, which investors believe could lead to a global trade war. This, in turn, creates risks for economic growth and reduces expectations of demand for energy resources, informs Reuters.
Brent crude futures were down $1.60, or 2.13%, at $73.35 a barrel after earlier falling 3.2%, the biggest daily decline since March 5. U.S. West Texas Intermediate crude was down $1.62, or 2.26%, at $70.09 a barrel, after an even deeper drop of 3.4%.
“The US tariff announcement clearly caught markets by surprise. Pre-announcement speculation was for a flat tariff of 15-20%, but the final decision was more aggressive. For oil prices, the focus is now shifting to the outlook for global growth, which is likely to be revised downwards due to these higher-than-expected tariffs.”,” explained Yip Jun Rong, market strategist at IG.
The White House announced that imports of oil, gas and refined products are not subject to the new tariffs.
“We know that it will be negative for trade, economic growth and therefore the increase in demand for oil. But we don’t know how bad it will be, because the consequences will appear a little later.” Bjarne Schildrop, SEB’s chief commodity analyst, noted.
Analysts at UBS on Wednesday cut their 2025-2026 oil price forecast by three dollars to $72 a barrel, citing weaker fundamentals. Currently, both traders and analysts expect more volatility in the market as tariff conditions may change and countries try to agree to soften rates or introduce mirror restrictions in response.
In addition, pessimism in the market increased after the publication of data from the US Energy Information Administration: over the past week, crude oil inventories in the country rose by an unexpectedly large 6.2 million barrels, while analysts had predicted a decline of 2.1 million. The jump was due to a sharp increase in imports from Canada, which is expected to suffer losses from US tariffs on oil supplies.
