Oil Prices Fall to Lowest Since 2021 Amid Tariff War and Rising Supply Concerns:

Crude oil prices continued their downward spiral for the fifth straight session, reaching levels not seen since February 2021. This decline is being driven by a combination of weakening demand projections and an escalating trade conflict between the United States and China, the world’s largest oil consumers.

Brent crude dropped by $1.39 or 2.21%, settling at $61.43 per barrel.

West Texas Intermediate (WTI) fell by $1.50 or 2.52%, down to $58.08 per barrel.

Both benchmarks dipped as much as 4% during early trading hours before recovering slightly.

US-China Tariff Escalation Spurs Global Recession Fears

Markets are reacting sharply to President Donald Trump’s recent decision to impose 104% tariffs on Chinese imports after Beijing failed to meet a deadline to remove its retaliatory measures. In response, China vowed not to yield, labeling the U.S. move as “blackmail.”

These developments have deepened concerns of a global economic slowdown, leading to fears of shrinking oil demand. According to experts, China's potential loss of 50,000 to 100,000 barrels per day in demand growth could further pressure global crude consumption unless stimulus measures boost domestic use.

Brent Backwardation Weakens, Reflecting Demand Concerns

The premium of prompt Brent futures over six-month contracts dropped to 98 cents per barrel, down from $3.53 earlier this month. This shrinking backwardation signals growing market unease over excess supply and softening demand.

OPEC+ Output Hike Adds to Supply Pressures

Oil’s downward trend was accelerated by OPEC+’s recent announcement to raise output by 411,000 barrels per day starting in May. Analysts warn this move could tip the market into oversupply, further dragging prices.

Price Forecasts Adjusted by Analysts

Goldman Sachs projects Brent crude could fall to $62 by December 2025, and to $55 by December 2026.

WTI crude is expected to slide to $58 by end-2025 and to $51 a year later.

In a historic dip, Russia’s ESPO Blend oil price also fell below the $60 per barrel Western price cap for the first time ever.

Slight Positive Signal from U.S. Inventory Data

In contrast to the general decline, a minor bullish sign emerged as U.S. crude inventories reportedly fell by 1.1 million barrels in the week ending April 4. This drop outperformed analyst expectations of a 1.4 million barrel build.

Official data from the Energy Information Administration (EIA) is awaited for further confirmation.