Lagos — WTI crude futures have fallen for seven consecutive trading days, dropping more than 20% from the April peak, hitting a four-year low. Recession fears are playing a key role in the oil selloff, especially with the U.S. pushing ahead with a 104% tariff on Chinese goods and Beijing showing no signs of compromise. That raises serious concerns about global demand.
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. At the same time, the 104% tariff could push U.S. inflation back toward 4%, even before other new tariffs are factored in. That would raise the odds of a deeper recession in the U.S. as well.
OPEC+’s plan to ramp up production from May has only added to the pressure. The 411,000 barrels per day hike is three times the size of its earlier monthly targets and aligns with Trump’s push to lower oil prices via fossil fuel supply. It’s shaping up to be a battle for market share between OPEC+ and the U.S., regardless of where prices go.
That said, short positioning is already heavily stretched, so the market could snap back on any signs of de-escalation. I’ll be watching U.S.-China talks closely – any breakthrough could be a key catalyst. On the flip side, if trade tensions worsen, oil prices may have further to fall.
*Dilin Wu Research Strategist at Pepperstone
