Crude oil prices plunged to a fresh four-year low as the escalating US-China trade war stoked fears of a global recession. Other commodities closely tied to economic growth, including iron ore and copper, also experienced significant declines in recent sessions as demand outlooks worsened in the world’s largest importer.
On Tuesday, crude oil prices dropped for the fourth consecutive day, reaching their lowest levels in four years. This decline comes amid growing concerns about a potential recession, exacerbated by the deepening trade war. The imposition of new tariffs by US President Donald Trump has sent shockwaves through markets, with China—the world’s largest oil importer—now facing a steep 104% tariff on its imports.
Since Trump’s announcement of the new tariffs, Brent crude futures have fallen more than 19%, hitting $60.41 per barrel, while West Texas Intermediate (WTI) futures have dropped 20%, to $57.06 per barrel, marking their lowest levels since March 2021.
In response to Trump’s threat of additional tariffs, China vowed to “fight to the end.” Meanwhile, the US remains committed to enforcing the full 104% tariff. The escalating trade war between the world’s two largest economies has triggered widespread sell-offs in risk assets.
“For China, the tariffs could significantly drag down exports and industrial output—two key engines of growth—while the tech and EV sectors may be particularly hard hit. We’re likely to see softer oil demand as a result,” said Dilin Wu, a market analyst at Pepperstone Australia. “The 104% tariff could push US inflation back toward 4%, even before other new tariffs are factored in. That would raise the odds of a deeper recession in the US as well,” she added.
Further exacerbating the situation, eight key members of the Organisation of the Petroleum Exporting Countries (OPEC) agreed last week to accelerate the unwinding of earlier production cuts. However, the potential for a deeper recession currently overshadows the geopolitical tensions related to oil production.
In response to the bleak market outlook, the US Energy Information Administration postponed its monthly Short-Term Energy Outlook report, originally set for release on Tuesday. The agency explained that it needed to “re-run our models to account for the most recent market developments” and indicated that the report would now be published on Thursday.
Goldman Sachs also revised its Brent crude forecast, lowering it to $40 per barrel by year-end, signaling a potential further 36% drop from current levels. However, Wu noted that any de-escalation in the trade conflict could lead to a market rebound: “Short positioning is already heavily stretched, so the market could snap back on any signs of de-escalation.”
China is expected to intensify its stimulus efforts, both fiscal and monetary. In March, Beijing reaffirmed a 5% GDP growth target for 2025 and introduced fresh stimulus measures to counteract the growing tariff threats. Additionally, the government raised its budget deficit target to 4% of GDP, the highest in three decades. Analysts predict that further policy support will be rolled out in response to the ongoing trade war.
Not just oil, but other growth-sensitive commodities have suffered sharp declines, driven by weaker demand expectations amid the escalating trade conflict. Copper futures on Comex have fallen 19% since April 3, hitting $4.07 per pound, the lowest level since January. Iron ore futures (62% Fe Fines CFR China) on the SGX have dropped 7% over the same period, reaching a low not seen since September 2024. Precious metals also took a hit, with spot gold down 6% and silver off 13% since last Wednesday, as investors liquidated holdings to cover losses in risk assets.
The sharp drop in industrial metals and essential minerals has significantly affected mining shares worldwide. In Australia, BHP Group—the world’s largest miner—has seen its shares fall 11% in the past four sessions, reaching their lowest point since October 2020. Similarly, Rio Tinto’s shares dropped 9%, hitting a seven-month low. “The unfortunate part of that is that if China sneezes, Australia is likely to catch a cold,” said Josh Gilbert, a market analyst at eToro Australia.
In Europe, Swiss mining giant Glencore saw its shares tumble 16%, reaching their lowest point since December 2020, while UK-listed Anglo American PLC saw a 14% drop, marking a one-year low over the same period.
