Amid the sharp deterioration of global trade conditions, international oil prices took a heavy hit last Friday, plunging over 7% in a single day to reach their lowest closing level since 2020. The crude oil market is under pressure mainly due to escalating concerns about a global economic recession, coupled with the OPEC+ alliance's push for substantial production increases, further dampening market sentiment.
Data shows Brent crude futures fell 6.5%, closing at $65.58 a barrel, with an intraday low of $64.03, while U.S. crude futures dropped 7.4%, finishing at $61.99, with a low of $60.45 during the session. Both prices hit their lowest levels in four years. On a weekly basis, Brent crude recorded its largest weekly drop in a year and a half, while U.S. crude marked its biggest weekly decline in two years.
The immediate trigger for this round of sharp declines was the rapid escalation of the trade war. After the U.S. government raised tariff barriers to historic highs, several major trading economies expressed strong retaliatory intentions, with market expectations forecasting severe disruption to global trade flows, thereby weakening demand for crude oil.
Additionally, the broader commodity markets weakened, with natural gas, soybeans, and gold also facing synchronized sell-offs, reflecting a sharp decline in overall investor risk appetite. Global stock markets fell broadly as safe-haven sentiment surged, with traders reducing high-risk asset holdings to seek liquidity.
Meanwhile, the OPEC+ alliance announced an increase in the planned production expansion for May from 135,000 barrels per day to 411,000 barrels per day, exceeding market expectations. This news exacerbated concerns over supply-demand imbalances in the oil market, with excess supply further suppressing oil prices in the face of weak demand expectations.
The Federal Reserve also expressed concerns about the economic outlook. Although a definitive response strategy has yet to be established, senior officials noted that inflation could rise under the current circumstances and economic growth could slow, with policy responses needing to await more data and developments.
Investment institutions have broadly lowered their future oil price forecasts. Some have reduced the target prices for December 2025 Brent crude and U.S. crude by $5, to $66 and $62 respectively, reflecting a pessimistic judgment on the medium to long-term supply-demand landscape.
Overall, the crude oil market is facing multiple adverse factors simultaneously, with rising trade barriers and supply expansion creating double pressure. Investor sentiment is fragile, and oil prices may continue to experience high volatility in the short term, with future trends depending on the strength of macro policy adjustments and whether global demand can stabilize and recover.
