Oil’s Collapse Deepens Below $60 as China Hikes Tariffs On US

Oil plunged to a four-year low as an intensifying trade war endangered energy demand, with a fresh wave of US and Chinese levies menacing the global economy.

Brent futures tumbled below $60 a barrel for the first time since 2021 as natural gas, copper and other commodities also slid. Shares of BP Plc and Shell Plc slumped more than 5%.

The declines echoed a wider plunge across global markets, with investors fleeing stocks and bonds around the world, after US President Donald Trump’s so-called reciprocal tariffs took effect and China retaliated with higher levies of its own. 

The tariffs are forcing analysts and traders to reassess their demand outlooks. Already banks from Goldman Sachs Group Inc. to Morgan Stanley have at least halved their expectation of oil consumption growth this year, while the US government delayed its monthly report as it reruns its models. 

The oil market’s forward curve has also dramatically repriced, pointing to an emerging oversupply just a few months down the line. 

Crude has collapsed over the last week as Trump’s increasingly aggressive trade agenda has eviscerated appetite for risk assets, with oil joining other commodities and equities in a swift and deep global market slump. 

The losses have been compounded by a decision by the OPEC+ alliance to loosen output curbs at a faster clip than previously expected. The one-two punch has spurred concerns that a previously anticipated oil glut will now be even bigger.

“My worry with this market is we actually haven’t priced in the worst,” Amrita Sen, founder and director of research at consultant Energy Aspects said in a Bloomberg TV interview. “We’ve been saying prices can absolutely trade with a five-handle, perhaps even with a four-handle.”

As midnight passed in the eastern US, the Trump administration pushed ahead with higher duties on roughly 60 trading partners. Most critically, the moves included what amounts to a 104% duty on many Chinese goods, imposed after Beijing hit back at the US with its own charges.

China raised tariffs on US goods again on Wednesday, from 34% to 84% staring April 10. 

Key metrics point to fast-loosening conditions in the oil market. A bearish contango structure is seeping along the oil futures curve for every month after September this year. The difference between the nearest two December contracts — a favored gauge of hedge funds to wager on supply and demand balances — settled in contango for the first time in years earlier this week. 

Elsewhere, crude options are at their most bearish since late 2021, as of Tuesday’s close, while a gauge of implied volatility has rocketed higher.

While the bulk of Trump’s tariffs, as well as retaliatory levies from other nations, threaten to stoke inflation by making goods more costly, oil’s collapse — plus associated declines in products such as diesel — will partly offset that dynamic. So far in April, US gasoline futures have sunk about 16%.

“We have now entered a new and dangerous crisis phase,” said Arne Lohmann Rasmussen, chief analyst at A/S Global Risk Management. “This means that fundamental factors in the oil market are irrelevant.”

Prices:

• Brent for June settlement slid 6.6% to $58.68 a barrel at 12:59 p.m. in London.

• WTI for May delivery fell 7.0% to $55.43 a barrel.