Sinking in Crude: Oil Markets Drown in Tariff Turmoil and OPEC Supply
Markets spiral as Trump’s tariff shock and OPEC+ supply boost send crude plunging and spark fears of global slowdown.

Oil prices crumbled Thursday, plunging more than 6% in a single session, as a wave of panic selling swept through financial markets. The catalyst? A one-two punch of new tariffs announced by former President Donald Trump and a surprise increase in oil production from OPEC and its allies. The result was a sharp correction in both West Texas Intermediate and Brent crude benchmarks, dragging energy stocks and broader markets along for the ride.
WTI and Brent Crude Suffer Sharpest Drop in Months
West Texas Intermediate (WTI) crude, the U.S. benchmark, nosedived to settle at $66.95 per barrel, while Brent crude closed at $70.14 — both marking their worst single-day performances since late 2023. At its session low, WTI hovered near $66.50, underscoring the intensity of the sell-off.
The oil plunge comes on the heels of Trump’s latest trade maneuver: sweeping tariffs on key trading partners. The former president, who's been leading in recent Republican primary polls, signaled a return to protectionist trade policies that rattled global markets during his first term. Energy-related equities, such as those tracked in the XLE ETF, led the decline on Wall Street as investors processed the far-reaching implications.
Markets in a Tailspin as Uncertainty Grips Traders
The shock wasn’t just in the energy pits. The Dow, S&P 500, and Nasdaq all suffered significant losses as investors scrambled to assess the ripple effects of rising trade tensions. According to Dennis Kissler, senior vice president of trading at BOK Financial Securities, the selloff was driven more by emotion than fundamentals.
"The panic selling that's occurring is very likely an over-exaggeration of the true fundamentals. Near term, however, there's a lot of unknowns, so you're seeing a lot of funds unwind positions," Kissler said Thursday morning.
Indeed, uncertainty has become the dominant theme. Investors are now questioning whether the fragile balance between oil supply and demand can hold up under the strain of aggressive tariffs and an increasingly bearish macroeconomic outlook.
OPEC+ Surprises With Supply Hike
Adding fuel to the fire, OPEC+ blindsided markets with a decision to increase output by 411,000 barrels per day starting in May. The move runs counter to earlier expectations that the group would maintain tight controls on production to support prices.
This production hike could prove significant. The global oil market, already grappling with volatile demand forecasts, now faces a glut risk heading into the summer driving season. The timing of the announcement — just hours after Trump’s tariff decree — sent an unmistakable message that geopolitical strategy may be outweighing economic pragmatism.
Angie Gildea, U.S. energy leader at KPMG, told Yahoo Finance that this confluence of factors paints a troubling picture for oil bulls.
“Markets are still digesting tariffs, but the combination of increased oil production and a weaker global economic outlook puts downward pressure on oil prices — potentially marking a new chapter in a volatile market,” Gildea said.
Global Trade Tensions Cloud Demand Outlook
Although energy products were technically exempt from the latest round of tariffs, the broader implications are hard to ignore. Trade wars have a way of dampening economic growth — and slower growth means weaker oil demand.
Nowhere is this more visible than in China, the world's largest importer of crude. With new tariffs bringing the total levy on Chinese goods to a staggering 54%, traders are bracing for a substantial pullback in Asia-led consumption. China’s demand isn’t just about volume — it sets the tone for global flows.
Rebecca Babin, senior energy trader at CIBC Private Wealth, underscored the impact: “[The] 54% tariff on China is a significant negative surprise. The tariffs on growing emerging economies that contribute most to crude demand growth (not absolute demand) are getting hit the hardest.”
U.S. Gasoline Prices Hit New Highs Before the Crash
Ironically, the selloff comes just as U.S. gasoline prices reached their highest levels since September. On Wednesday, the national average for a gallon of gas neared $3.25, driven by previous oil price rallies and tight refinery margins.
That bullish momentum now seems distant, replaced by renewed concerns about oversupply and eroding demand. If the panic persists, pump prices may soon begin to reverse — but that’s hardly a silver lining when it’s rooted in fears of global economic deceleration.
Trump's Energy Playbook Sparks Volatility
It’s not the first time Trump’s trade tactics have collided with energy markets. From sanctions on Iran and Venezuela to threats of tariffs on nations buying Russian crude, Trump has long wielded energy policy as a geopolitical lever. But this latest tariff escalation, which spares oil but strikes at major economies, is shaping up to be one of his most disruptive moves yet.
The broader message? Expect more market-moving headlines. Investors are quickly realizing that Trump’s comeback bid could mean a return to whiplash-inducing policy shifts that defined much of the 2018–2020 period.
What’s Next for Crude?
With oil plunging and volatility spiking, analysts are split on where prices go from here. Some see a short-term overreaction, with fundamentals — such as robust summer travel demand and steady U.S. consumption — ultimately putting a floor under prices.
Others warn that the dual forces of trade protectionism and supply expansion could trigger a more prolonged correction. If demand falters in China and India while OPEC+ keeps pumping, $60 oil could soon be on the table.
The one certainty? Traders and investors should buckle up. The global oil market has entered a new era of geopolitical chess, and each move carries outsized consequences.
Conclusion
The dramatic 6% drop in oil prices underscores how quickly sentiment can shift in today’s interconnected markets. With Trump’s tariffs threatening to chill global growth and OPEC+ pouring more barrels into an already jittery market, traders are left navigating uncharted waters. While some of the fear may prove exaggerated, the uncertainty is real — and the volatility may just be getting started.
