- Crude oil prices fell to $65 per barrel for the first time since 2021
- The price slump follows Donald Trump’s tariffs imposition and its spin-off effect on global trade
- Oil prices earlier fell to $69 per barrel following the decision by the Organisation of Petroleum Exporting Countries and Allies to increase output by May
Crude oil prices fell to $65 per barrel, the first time since 2021, following the United States' import tariffs and a sudden Organisation of Petroleum Exporting Countries and Allies (OPEC+) output increase.
The dual impact of the policies, as well as China’s retaliatory tariff action, erased $10 per barrel from global benchmarks.
Oil prices appreciated last week when US President Donald Trump imposed tariffs on any country that buys crude from Venezuela. However, as of Friday, April 4, Brent fell to $65, the first time since 2021.
According to oilprice.com, the combined effect of the actions led to a $10 erasure per barrel from global oil prices “with ICE Brent falling below $65 per barrel for the first time since August 2021.”
It said the US West Texas Intermediate (WTI) crude futures lost $4.96, or 7.4 per cent, to end at $61.99.
“Seeing backwardation barely change compared to the beginning of the week, one could assume that US tariffs are the defining factor for the price change.
“Nevertheless, this week will not go down well in the history of oil markets,” oilprice.com reported.
Trump’s tariffs and their spin-off effect on global trade
President Trump announced sweeping tariffs on April 2, including a baseline 10 per cent tariff on US imports and reciprocal tariffs against countries that impose higher duties on US goods.
The new tariffs, which take effect immediately, apply to over 50 countries, including China, the European Union, India, Japan, and developing economies in Africa, Asia, and Latin America.
The tariff imposition extends to Nigeria, Ghana, Ethiopia, Mauritius, Algeria, and other African countries.
The US tariffs imposition led to China’s retaliatory tariffs on US goods, escalating a trade war that has led investors to price in a higher probability of recession.
China, the world’s top oil importer, announced it will impose additional tariffs of 34 per cent on all US goods from April 10.
Reuters reported that nations around the world have readied tariff retaliation, following in China’s steps, after Trump raised tariffs to their highest in more than a century.
Oil prices fell to $69 per barrel following OPEC+ announced output increases
Another factor that further pressured oil prices was the OPEC+’s decision to advance plans for output increases.
OPEC+ announced on Thursday, April 3, that it would increase production to 411,000 barrels per day (bpd) in May, up from the previously planned 135,000 bpd.
It said the move follows eight member countries’ decision, after a virtual meeting, to phase out oil output cuts.
The countries are Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman.
Following the production boost, the price of Brent crude fell by 6.8 per cent to $69.85 a barrel while US WTI crude declined by 7.08 per cent to $66.63, at 10 pm WAT.
OPEC extends Nigeria’s 1.5 million bpd oil production quota to 2026
Meanwhile, TheRadar earlier reported that the Organisation of Petroleum Exporting Countries (OPEC) extended Nigeria’s oil production quota of 1.5 million barrels of crude per day (bpd) to December 2026.
It said the decision to extend Nigeria’s quota was made at its 38th OPEC and non-OPEC ministerial meeting, held on Thursday, December 5.
