WTI crude oil futures dropped by over 7% to $62 per barrel on Friday, reaching their lowest level since August 2021, following a 6.6% decline the previous day.
Oil slumps for second session
The sharp selloff was driven by a combination of factors, primarily a surge in OPEC+ output and growing concerns over the impact of escalating global trade tensions. OPEC+ has significantly accelerated its plans to increase oil supply, now aiming to add 411,000 barrels per day (bpd) in May—far exceeding the previously set target of just 135,000 bpd. The decision to boost production comes as the oil cartel seeks to balance global supply and demand amidst fluctuating market conditions and potential risks to economic growth.
Trade disputes weigh heavily on global markets
Despite oil, gas, and refined products being exempt from recent U.S. tariffs, ongoing trade disputes continue to weigh heavily on global markets. The intensification of the trade war, particularly with China’s announcement of a 34% tariff on all U.S. goods starting April 10, has heightened concerns over global economic slowdown and the potential dampening of oil demand. The tariffs—part of a broader retaliatory measure against the Trump administration’s import duties—have fueled fears that the trade conflict will disrupt international supply chains and impact key sectors like manufacturing and energy.
Eyes on demand
Adding to the pressure, traders are also grappling with the potential for weaker-than-expected global demand growth, especially in key markets like China, the world’s largest importer of oil. The looming threat of a global recession, combined with the ramping up of oil production by OPEC+, has created a bearish outlook for crude prices. Oil is now on track for nearly a 10% decline for the week, marking its largest percentage drop in six months. With the global economy facing growing uncertainty and oil supply set to increase, market participants will be closely watching the next round of economic data and geopolitical developments for further signs of direction in the crude oil market.
