Oil prices fell sharply on Thursday, April 3, after former US President Donald Trump announced a new round of import tariffs.
Investors are concerned that the move could lead to a global trade war, slowing economic growth and cutting fuel demand.
According to Reuters, Brent crude fell $1.60, or 2.13%, to $73.35 per barrel. Earlier in the day, it had dropped by more than 3%—the biggest daily fall since early March. US West Texas Intermediate (WTI) crude dropped by $1.62, or 2.26%, to $70.09.
The drop came after Trump announced a minimum 10% tariff on most goods entering the US.
Many countries will face even higher rates.
The US is the world’s largest oil user, and the new tariffs could weaken trade and economic activity.
Markets Caught Off Guard
“The US tariff announcement clearly caught markets by surprise,” said Yip Jun Rong, a market expert at IG, in comments shared with Reuters.
He said many expected a flat 15–20% tariff, but the final plan was more aggressive.
Now, traders are focused on what this might mean for the global economy.
A slowdown could reduce the need for oil and energy in general.
Oil Exempt—but Worries Remain
While the White House confirmed that oil, gas, and fuel products are not affected by the tariffs, analysts say the wider economic impact could still hurt oil demand.
“This is clearly bad for trade and economic growth, and that means lower demand for oil,” said Bjarne Schildrop, chief commodities analyst at SEB. “But we don’t yet know how big the impact will be.”
UBS analysts lowered their oil price predictions for 2025 and 2026 by $3 per barrel, now expecting prices to average $72 due to weaker global conditions.
Big Inventory Surprise Adds Pressure
The US Energy Information Administration (EIA) reported that crude oil stocks rose by 6.2 million barrels last week, far more than the expected 2.1 million barrel drop.
This surprise increase added more pressure to already falling prices.
The EIA also said that gasoline demand was down and that refineries were producing less fuel than usual for this time of year.
Experts expect oil prices to stay unstable in the coming weeks. Other countries might respond to the US tariffs with their own trade rules, or they may try to negotiate exemptions.
The long-term effects on oil prices will depend on how global trade and economic growth hold up in the face of these new policies.
