Oil prices dropped sharply on Thursday, giving back the gains from the previous session, as investor optimism over a brief pause in sweeping U.S. tariffs faded and attention turned back to the escalating trade war between Washington and Beijing. U.S. West Texas Intermediate (WTI) crude futures fell $2.28, or 3.7%, to settle at $60.07 per barrel, while Brent crude futures dropped $2.15, or 3.3%, to close at $63.33 a barrel. The reversal came just a day after both benchmarks had rallied by more than $2 a barrel on news that President Trump would pause recently enacted tariffs on dozens of U.S. trading partners.
However, any relief was short-lived as Trump simultaneously raised tariffs on Chinese imports to 145%. In response, China imposed an additional 84% levy on U.S. goods. Analysts warned that higher tariffs could further reduce U.S. crude exports to China, which already fell to 112,000 barrels per day in March—down from 190,000 bpd last year, based on vessel tracking data from Kpler. Ritterbusch and Associates noted that reduced Chinese buying would likely cause crude to back up in U.S. storage, putting additional pressure on prices.
Concerns about a prolonged trade war and its impact on global economic growth also weighed heavily on investor sentiment. Henry Hoffman of the Catalyst Energy Infrastructure Fund warned that continued disputes would cause “significant economic damage” globally. Those fears were echoed in recent data: U.S. crude stockpiles rose by 2.6 million barrels last week, nearly double analyst expectations. Macquarie analysts forecast another inventory build this week.
Meanwhile, the U.S. Energy Information Administration lowered its forecasts for both global economic growth and oil demand, citing the drag from trade tensions. The agency warned that ongoing tariff pressures could continue to weigh on prices, especially amid recession concerns. As Ritterbusch and Associates put it, the market remains focused on “tariff-driven expectations of reduced demand” and the looming threat of a U.S. economic downturn, which together are likely to cap any short-term gains in oil prices.