Trump Tariff Aftershock Causes 7% Oil Price Freefall

Oil hasn't incurred such a steep plummet since 2021: File Image/Pixabay

The Organization of the Petroleum Exporting Countries' (OPEC) unexpected decision to speed up output hikes, combined with ongoing jitters about U.S. president Donald Trump's tariffs, caused oil to plummet a hefty 7 percent on Friday – paving the way for what is almost assuredly a bearish trading environment with legs.

China announcing it will impose additional tariffs of 34 percent on all U.S. goods from April 10 contributed to the trading gloom; Beijing also imposed restrictions on about 30 defense related American organizations.

The 7 percent price decline was for Test Texas Intermediate, which settled at $61.99 per barrel, while Brent dropped more than 6 percent to settle at $65.58; the last time crude traded at these levels was in 2021.

Natasha Kaneva, analyst at JPMorgan, wrote on Friday that "The tariffs, if they stay in place, would be a big hit to the US and global growth, likely pushing the US and global economy into recession this year."

Angie Gildea, energy leader at KPMG, added, "the combination of increased oil production and a weaker global economic outlook puts downward pressure on oil prices — potentially marking a new chapter in a volatile market."

For the record, OPEC tripled a planned output hike for May just hours after Trump announced his infamous "Liberation Day" round of global tariffs, which pundits think was an effort to lower prices and punish members who were exceeding their production quotas.

For its part, the Federal Reserve Bank of Dallas noted that U.S. oil futures settling near $61 per barrel on Friday was well below the $65 threshold many companies need to profitably drill new wells in Texas and surrounding states; and the tariff war is reportedly driving up the price of drilling equipment.