Oil prices continued to fall on Friday, extending the sharp decline that began the day before as President Trump's tariffs increased fears that could cut global economic growth and reduce oil demand.
International benchmark Brent crude traded at its lowest level in over three years, falling almost 8%, at under $65 per barrel.
Prices began slipping on Thursday as Trump unlocked tariffs on American trading partners, starting with a 10% baseline obligation worldwide and with a high obligation by others, including a 34% tariff from China.
On Friday, China announced a 34% retaliatory tariff on the US. This further shocked the concern that demand for oil and other commodities could be curbed by trade disruptions. As the world's largest oil importer, China's actions are closely monitored by oil traders.
White House aide Peter Navarro, who advised Trump on trade, said the economic benefits of oil would be an additional $50 barrel that would help keep inflation under control.
At around $62 per barrel in the US, crude oil prices are approaching a level that is not necessarily beneficial for businesses to drill new wells, according to the Federal Reserve Bank of Dallas.
A surprising decision on Thursday by SAUDI Arabia-led OPEC and the cartel's group of Saudi Arabia-led countries has further reduced crude oil prices by accelerating planned production. Essentially, the market is concerned about a bearish mix of tariffs that weaken demand, which is exacerbated by increasing pressure from oil-producing countries such as Iraq and Kazakhstan, as they are added to supplies.
In a note to clients, an analyst at Morgan Stanley said there is a demand for oil growth as it could possibly loom in the midst of a recession.
