Global Oil Prices Tumble to Four-Year Lows Amid Escalating U.S.-China Trade War
Global crude oil prices plunged to their lowest point since February 2021 on Wednesday as rising geopolitical tensions and mounting trade hostilities between the United States and China rattled investor confidence and dampened global demand forecasts.
According to Reuters, Brent crude futures dropped by $2.38 (3.79%) to $60.44 per barrel, while U.S. West Texas Intermediate (WTI) fell $2.46 (4.13%) to $57.12 as of 4:23 a.m. GMT. The sharp declines mark five consecutive days of losses, signaling growing anxiety over a potential global oil surplus.
Trade War Pressures Mount
The market downturn follows the U.S. government’s imposition of a staggering 104% tariff on Chinese goods, which took effect at midnight on Wednesday. President Donald Trump’s decision includes an additional 50% punitive levy in response to China’s refusal to ease its retaliatory tariffs.
Beijing swiftly condemned the move, labeling it economic “blackmail” and promising further countermeasures, thereby escalating fears of a prolonged trade war that could stifle global economic growth and slash fuel consumption.
“The chance of a swift resolution has dimmed considerably,” noted Ye Lin, Vice President of Oil Commodity Markets at Rystad Energy. “This tit-for-tat tariff exchange raises the risk of a global economic slowdown, with a direct hit to oil demand, particularly from China.”
Supply Concerns Deepen
Compounding the situation, the Organization of the Petroleum Exporting Countries and allies (OPEC+) announced a planned output increase of 411,000 barrels per day (bpd) starting in May. This production boost, while aimed at stabilizing supply chains, has reignited concerns over a potential oversupply in the market.
Market indicators also reflect this sentiment. Brent’s six-month spread narrowed sharply to $0.79 — a significant drop from its $5.69 peak in January — pointing to rising inventories and weakening demand outlook.
Goldman Sachs, in its latest projection, forecasts Brent crude to average $62 per barrel by the end of 2025 and fall further to $55 by the end of 2026, with WTI expected to follow a similar trend.
Nigeria Faces Renewed Economic Pressure
For oil-dependent nations like Nigeria, the sudden drop in crude prices poses a serious economic threat. With oil accounting for roughly 80% of government revenue and 95% of foreign exchange earnings, Nigeria’s 2025 fiscal plan — based on a benchmark oil price of $75 per barrel — is now under considerable strain.
Prolonged price weakness could result in wider budget deficits, increased debt servicing, and heightened pressure on the already volatile foreign exchange market. Additionally, the subdued market sentiment and narrow Brent spread may deter new investments in Nigeria’s upstream oil sector, especially in high-cost deepwater exploration projects.
Glimmer of Hope
However, there is a slight reprieve. Data from the American Petroleum Institute (API) revealed a surprise drawdown of 1.1 million barrels in U.S. crude stockpiles, suggesting some resilience in oil demand despite broader market fears.
Still, analysts warn that without a resolution to the U.S.-China standoff and more coordinated global supply strategies, the bearish outlook on oil could persist well into 2026.
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Global Oil Prices Tumble to Four-Year Lows Amid Escalating U.S.-China Trade War