Brent crude oil futures fell more than 2% on Thursday to dip below $64 per barrel, retreating after a sharp 4.2% rally in the previous session, as escalating trade tensions between the United States and China renewed fears of weaker global oil demand.
Brent crude oil pull back below $64
The market’s reversal came in response to U.S. President Donald Trump’s latest tariff escalation, which saw levies on Chinese imports increased to 125%, just one day after a previous hike raised them to 104%. Although Trump simultaneously announced a 90-day suspension on the implementation of new tariffs for most other U.S. trading partners, the decision to intensify economic pressure on China — the world’s largest crude oil importer — sparked renewed concerns that a prolonged slowdown in Chinese economic activity could depress fuel consumption globally.
In retaliation, China imposed its own round of tariffs on American goods, lifting duties to 84%, while signaling that it would introduce fresh stimulus measures aimed at cushioning the impact on key domestic sectors such as housing, infrastructure, and household consumption. However, analysts warn that even with targeted stimulus, the drag on industrial activity and trade flows could weigh heavily on China’s energy demand in the coming months, particularly as refiners reduce throughput amid weaker margins and high inventory levels.
OPEC+ plans to accelerate production increases
At the same time, supply-side pressures are mounting. The OPEC+ alliance announced plans to accelerate production increases in response to perceived tightness earlier in the year, raising fears that the group may be overshooting demand at a time of heightened macroeconomic risk. With output from non-OPEC producers such as the U.S., Brazil, and Canada already trending higher, the possibility of an oversupplied market is beginning to gain traction among traders, putting additional downward pressure on prices.
Further compounding the market’s uncertainty is the continued shutdown of the Keystone pipeline, a critical conduit for Canadian crude exports to the U.S. Midwest and Gulf Coast. The pipeline was taken offline following a spill in North Dakota, and operator TC Energy has yet to provide a firm timeline for its restart. The disruption has created localized supply tightness and logistical challenges, though its broader impact has been overshadowed by the macroeconomic risks tied to trade policy.
Taken together, the volatile interplay between geopolitical tensions, shifting trade dynamics, supply-side adjustments, and infrastructure bottlenecks has created a highly uncertain backdrop for crude markets. Investors remain on edge, watching for signs of policy resolution or further escalation that could tip the delicate balance between supply and demand in the global energy landscape.
