SINGAPORE: Oil prices slumped to their lowest level in over four years today, marking their steepest five-day decline since March 2022, as fears of a global recession deepened amid escalating trade tensions between the United States and China. The sell-off also rippled across commodity markets, dragging down base metals and agricultural goods.
The drop follows U.S. President Donald Trump’s announcement on April 2 of sharply higher tariffs on key trading partners, which has wiped nearly 20% off oil prices since. The latest round of tariffs, including a staggering 104% duty on Chinese imports, has rattled financial markets and clouded the global economic outlook.
“Crude oil extended losses amid signs of escalation in the trade war,” analysts at ANZ said in a note, highlighting that copper prices have also plunged nearly 10% since the announcement of the new tariffs.
The U.S. confirmed that the increased tariffs on Chinese goods will come into effect shortly after midnight, while also initiating talks with other affected trading partners.
Market sentiment soured further as China announced retaliatory tariffs of 34% on all U.S. goods, effective April 10. The move severely dims hopes for a quick resolution between the world’s two largest economies.
“The aggressive retaliation by China lowers the chances of a swift trade deal and raises the risk of a global economic slowdown,” said Ye Lin, Vice-President of Oil Commodity Markets at Rystad Energy.
She warned that China’s projected oil demand growth of up to 100,000 barrels per day could be undermined if the trade war drags on. However, she noted that Beijing’s potential stimulus measures to boost domestic consumption may offset some of the downside.
Commodities Under Pressure
In China, base metal prices extended losses. Copper futures on the Shanghai Futures Exchange slid to an eight-month low, while iron ore on the Dalian Commodity Exchange dropped 3%. Benchmark copper on the London Metal Exchange declined 1%, recording its largest five-day loss since March 2020.
Gold prices also edged lower as U.S. Treasury yields climbed, while nervous investors weighed the intensifying trade conflict.
In the agricultural sector, Malaysian palm oil futures fell over 1%, and rubber prices sank to their lowest level in more than a year. Meanwhile, Chicago soybean futures rose for a third consecutive session, rebounding from four-month lows earlier this week, supported by rising prices in Brazil and a softer U.S. dollar.–REUTERS
