OPEC+ Surprises With Output Hike: OPEC+ shocked markets by announcing a 411,000 bpd output increase starting in May, tripling the pace of planned hikes despite plummeting oil prices and fears of a global economic slowdown. The group claimed the decision was based on a “positive market outlook,” though the timing coincided with a deepening selloff triggered by U.S. tariffs and China’s retaliation. The move added bearish pressure to an already declining market, with WTI crude sliding sharply into levels not seen since the pandemic’s worst days. Analysts suggest the hike is less about demand optimism and more about internal struggles to enforce production discipline among members like Kazakhstan.
Recession Fears Grip Markets: Global markets continued their sharp selloff on Friday as fears of a looming recession escalated following President Trump’s sweeping new tariffs, the steepest trade barriers seen in over a century. U.S. stocks lost $2.4 trillion in value in a single day, their worst drop since March 2020, while Asian markets remained under pressure amid thin holiday trade. Safe-haven assets like gold and the Swiss franc surged, and the U.S. dollar slid to a six-month low as traders priced in nearly a full percentage point of Federal Reserve rate cuts by year-end. Market sentiment remains fragile, with investors awaiting Fed Chair Jerome Powell’s comments for signs of a policy pivot amid rising stagflation risks.
Trade War Dampens Demand Outlook: The deepening U.S. vs China trade war is fueling fears of a global economic slowdown, which in turn is pressuring oil prices lower. With both nations imposing steep tariffs on each other’s goods, analysts worry the standoff could dampen industrial activity and transportation demand, two key pillars of oil consumption. While energy products like crude oil weren’t directly targeted in this round, the broader implications for global trade and GDP growth have added to bearish sentiment in the oil market. Traders are increasingly cautious, with demand side concerns outweighing recent supply-side developments.
Market Overview: WTI plunged nearly 8% this morning, extending Thursday’s sharp losses and marking its lowest close since 2021. The two-day selloff reflects deepening fears of a global recession as China retaliated with sweeping 34% tariffs on all U.S. imports following President Trump’s historic tariff escalation. The rout was further fueled by OPEC+’s surprise decision to ramp up output by 411,000 bpd in May, raising concerns of oversupply in an already shaky demand environment. With financial markets reeling and energy demand expectations deteriorating, analysts are warning of further downside for oil as trade tensions and economic headwinds intensify.
Oil Imports Exempted

Despite the U.S. imposing sweeping tariffs on imports, oil, gas, and refined product imports from Canada, Mexico, and OPEC will be exempt. This exemption offers significant relief to U.S. refiners, especially as Canada and Mexico remain major sources of crude oil, with Canada being the largest supplier, and OPEC countries also providing key imports for U.S. East Coast refineries. However, concerns about the broader impacts of escalating trade tensions on global demand persist, which could still weigh on oil prices. While the tariff exemption helps safeguard supply chains, uncertainty surrounding the trade war continues to cloud the market's outlook.
