Oil prices rebounded sharply on Wednesday, climbing over 4% after hitting four-year lows earlier in the session, following President Trump’s announcement of a 90-day pause on tariffs for most countries—though he hiked the rate on China to 125%, effective immediately. This came on the same day the previously announced 104% tariff on Chinese goods took effect. Brent crude rose $2.66, or 4.23%, to settle at $65.48 a barrel, while U.S. West Texas Intermediate (WTI) gained $2.77, or 4.65%, to close at $62.35. Earlier in the day, both benchmarks had been down around 7%.
Analysts viewed the move as a shift in tone, giving room for deals with countries open to negotiations while isolating China. China responded with its own escalations, announcing an 84% tariff on U.S. goods starting Thursday. Bob Yawger of Mizuho noted that the U.S. appears to be strengthening ties with other trade partners that China had hoped to align with.
Despite the gains, ongoing fears of a global recession continued to loom over the market. UBS analyst Giovanni Staunovo said oil demand hasn’t yet taken a hit, but growing concerns require lower prices to adjust supply before the market becomes oversaturated. Canada and the European Union also imposed retaliatory tariffs on Wednesday, further intensifying the trade conflict.
Meanwhile, OPEC+’s recent decision to boost output in May by 411,000 barrels per day weighed on gains, with analysts warning it could tip the market into surplus. U.S. crude inventories added to bearish sentiment, rising by 2.6 million barrels last week to 442.3 million—well above analysts’ forecasts. Additional pressure came from a force majeure declared on the Keystone pipeline following a leak in North Dakota, raising concerns over near-term supply disruptions.