Oil prices experienced significant fluctuations on Wednesday, dropping to their lowest in four years due to concerns over decelerating economic growth amidst an escalating trade conflict. However, prices later rebounded by 2% following President Donald Trumpโs announcement of a 90-day delay on most trade tariffs.
The rebound was reflected in the U.S. benchmark crude, which rose by 2% or $1.20, settling at $60.79 per barrel, after initially sinking by 4.3% to $56.98 per barrel around midday on the New York Mercantile Exchange. Earlier, prices had dipped to levels not observed since February 2021, a period marked by the depth of the COVID-19 pandemic.
Since the start of the year, energy prices have been on a downward trajectory, with the price of a barrel of oil losing approximately $20 since January. In comparison, a barrel of U.S. crude was priced at $85 a year ago, while it was around $71 at the beginning of April before tariff implementations. On Wednesday, Brent crude, the European oil standard, also rose to positive territory, reaching $63.90 per barrel.
The most recent decline in energy prices was triggered as Trumpโs latest round of tariffs took effect past midnight, imposing a 104% tax on Chinese goods. In a swift reaction, China, as the worldโs second-largest economy, declared it would increase tariffs on imported U.S. goods to 84% by Thursday. The European Union nations also joined in, imposing retaliatory tariffs on $23 billion worth of American goods. Currently, these tariffs affect a minor portion of the $1.8 trillion annual U.S.-EU trade.
The sharp decline in oil prices hints at a gloomy outlook on economic growth and could be an early warning of an impending recession, as it leads manufacturers to scale back production and businesses to decrease travel expenses, while families reconsider vacation plans. Delta Air Lines, which anticipated a banner year, withdrew its 2025 financial projections on Wednesday due to the trade conflictโs unpredictable effects, which have also strained business and consumer spending while hindering travel bookings.
โWith widespread economic uncertainty surrounding global trade, growth has stagnated,โ remarked Delta CEO Ed Bastian. The stock prices of major U.S. oil companies also dropped on Wednesday, with industry experts suggesting the onset of a recession. โWe are going into a recession,โ commented Neil Dutta of Renaissance Macro Research in a memo to clients. โI donโt think it is particularly controversial to assert this.โ