Crude oil prices fell for a fourth consecutive trading day on Tuesday, hitting their lowest levels in four years, as recession fears intensified amid a deepening global trade war. US President Donald Trump’s sweeping reciprocal tariffs have now come into effect, with China—currently the world’s largest oil importer—facing 104% import duties.
Since Trump’s announcement of the new tariffs, Brent crude futures have dropped more than 19% to $60.41 per barrel, while West Texas Intermediate (WTI) futures plunged 20% to $57.06 per barrel—both marking their lowest levels since March 2021.
On Tuesday, China vowed to “fight to the end” following Trump’s threat of an additional 50% in tariffs. The US, meanwhile, remains committed to enforcing the full 104% levies. The intensifying trade war between the world’s two largest economies has once again triggered a broad sell-off in risk assets.
“For China, the tariffs could significantly drag down exports and industrial output—two key engines of growth—while the tech and EV sectors may be particularly hard hit. We’re likely to see softer oil demand as a result,” Dilin Wu, a market analyst at Pepperstone Australia, said in an email. “The 104% tariff could push US inflation back toward 4%, even before other new tariffs are factored in. That would raise the odds of a deeper recession in the US as well,” she added.
Compounding the downside pressure, eight key members of the Organisation of the Petroleum Exporting Countries (OPEC) agreed last week to accelerate the unwinding of earlier production cuts. Meanwhile, Trump’s so-called “secondary tariffs” on major oil exporters such as Venezuela, Iran, and Russia may offset some of the production hikes. However, recession fears heavily overshadow geopolitical tensions at this moment.
Against this backdrop, the US Energy Information Administration delayed its monthly Short-Term Energy Outlook report, originally due on Tuesday. The agency cited the need to “re-run our models to account for the most recent market developments” and said it would now publish the report on Thursday. In response to the deteriorating outlook, Goldman Sachs slashed its Brent crude forecast to $40 per barrel by year-end, implying a further 36% drop from current levels.
However, Wu added that any signs of de-escalation in the trade conflict could trigger a rebound: “Short positioning is already heavily stretched, so the market could snap back on any signs of de-escalation.”
China is also expected to ramp up its stimulus efforts, both fiscally and monetarily. At its annual meeting in March, Beijing reaffirmed a 5% GDP growth target for 2025 and announced fresh stimulus measures amid escalating tariff threats from the US. The government has also raised its budget deficit target to 4% of GDP—the highest in three decades. Analysts expect further policy support to be announced soon, particularly in response to the trade war.
China-sensitive commodities slump, hammering mining stocks
Not only oil but also other growth-sensitive commodities have seen sharp declines in recent sessions, driven by weakening demand expectations amid the all-out trade war. Copper futures on Comex have dropped 19% since 3 April to $4.07 per pound—the lowest level since January. Iron ore futures (62% Fe Fines CFR China) on the SGX have slumped 7% over the same period to a low not seen since September 2024. Even precious metals were not spared, with spot gold down 6% and silver off 13% since last Wednesday as investors sold holdings to cover losses in risk assets.
The decline in industrial metals and critical minerals has battered mining shares globally. In Australia, BHP Group—the world’s largest miner—has seen its shares fall 11% over the past four sessions to their lowest since October 2020, while Rio Tinto’s shares declined 9% to a seven-month low. “The unfortunate part of that is that if China sneezes, Australia is likely to catch a cold,” said Josh Gilbert, a market analyst at eToro Australia.
In Europe, Swiss mining giant Glencore saw its shares dive 16% to their lowest since December 2020, while UK-listed Anglo American PLC shed 14% to hit a one-year low over the same period.
