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Oil prices were heading towards their lowest close since the midst of the coronavirus pandemic in 2021 on Friday, hit by U.S. President Donald Trump's barrage of new tariffs and output increases announced by the OPEC+ producer group. Brent futures plummeted by $2.29, or 3.3%, to $67.85 a barrel by 0948 GMT. U.S. West Texas Intermediate crude futures dived by $2.32, or 3.5%, to $64.63. Both benchmarks were on course for their biggest weekly losses in percentage terms for half a year. While the tariff announcement by Trump on Wednesday hurt crude prices, the impact was more severe elsewhere. Investors scrambled to the safety of bonds, the Japanese yen and gold as the news sent shockwaves through global financial markets. The dollar index, which measures the U.S. currency against six other currencies, fell to 102.98 for its lowest since mid-October. Between Trump's tariffs and the OPEC+ output increase, "the oil complex could do little but acquiesce to the type of selling not seen since the collapse experienced during the pandemic", oil broker PVM's John Evans said in a note. "That rout continues into Asia today." Fuelling the oil sell-off was a decision by the Organization of the Petroleum Exporting Countries and its allies, known collectively as OPEC+, to advance plans for output increases, with the group now aiming to return 411,000 barrels per day (bpd) to the market in May, up from the previously planned 135,000 bpd. "The timing is frankly amazing," Evans said. Imports of oil, gas and refined products were given exemptions from Trump's sweeping new tariffs, but the policies could stoke inflation, slow economic growth and intensify trade disputes, weighing on oil prices. Goldman Sachs analysts responded with sharp cuts to their December 2025 targets for Brent and WTI by $5 each to $66 and $62 respectively. "The risks to our reduced oil price forecast are to the downside, especially for 2026, given growing risks of recession and to a lesser extent of higher OPEC+ supply," the bank's head of oil research, Daan Struyven, said in a note. However, analysts at Rystad Energy said oil prices could bounce back in the coming months. "With potential supply disruptions stemming from sanctions and tariffs - on both sellers and buyers - oil prices are unlikely to stay below $70 for long," said Mukesh Sahdev, Rystad's global head of commodity markets.

U.S. President Donald Trump may have dubbed April 2 “Liberation Day” while unveiling sweeping new tariffs, but Chris Wood, global head of equity strategy at Jefferies, sees the move as a damaging turn in U.S. trade policy, calling it “an impoverishment day, not a liberation day” in his latest GREED & fear report.“Tariff hikes are plain bad news, as the historic precedent of the Smoot-Hawley Tariff Act of 1930 highlights,” Wood wrote. “This is an impoverishment day, not a liberation day, in our view.”Trump marked what he called “Liberation Day” by announcing a dramatic overhaul of U.S. trade policy, including a uniform base tariff of 10% on all imports — a sharp jump from the pre-Trump 2.0 average of around 2.5%. The base rate will take effect on April 5.In addition, the administration unveiled a second layer of “reciprocal” tariffs targeting major trading partners. Asia faces some of the steepest hikes, with Cambodia being slapped with a 49% levy, Laos at 48%, and Vietnam at 46%. India will be subject to a 27% rate, while China’s effective tariff rises to 54% when previously announced duties are included. Key U.S. allies haven’t been spared either, with Japan facing a 24% rate and the European Union 20%, although Canada and Mexico were exempted from the new measures.The tariffs are aimed at addressing the U.S.’s ballooning trade deficit, which currently stands at around $1.2 trillion — the gap between the value of goods imported and exported. But analysts, including Wood, warn that the aggressive tariff policy risks triggering retaliatory moves and disrupting global supply chains.Wood also pointed to an unexpected market reaction: “It is also very significant that the US dollar is weakening, which is the opposite of what the likes of Stephen Miran, chairman of the Council of Economic Advisers, would have expected.”Beyond the tariffs, Wood flagged what he sees as a troubling absence of internal economic restraint in the Trump administration. “It is becoming ever more apparent that the second Trump administration is missing a person on the economy to curb some of Donald Trump’s more extreme instincts, most particularly when they are driven by the notion that trade is a zero-sum game,” he wrote. He credited former Treasury Secretary Steven Mnuchin with having played that role effectively during Trump’s first term.Wood also called the upcoming departure of Elon Musk from the government in late May a negative development, and reiterated his view that U.S. equity markets remain vulnerable. “GREED & fear’s base case remains that the risk of a waterfall decline in the U.S. stock market is rising,” he wrote, citing not only elevated valuations but also “a panic unwind of passive investment where everybody owns the same stocks.”Also read | Trump’s tariff bombshell sparks US recession fears—Will India pay the price?(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)