Oil prices experienced a significant decline, dropping by as much as 3%, following the announcement of sweeping new tariffs by U.S. President Donald Trump. Investors are concerned that these tariffs will exacerbate a global trade war, potentially curtailing economic growth and limiting fuel demand. Brent futures fell by $1.97, or 2.63%, to $72.98 a barrel, marking the biggest daily percentage decline since March 5. U.S. West Texas Intermediate crude futures also dropped by $2.01, or 2.80%, to $69.70.

Trump’s announcement of a 10% minimum tariff on most goods imported to the United States, with higher duties on products from several countries, has intensified fears of a global trade war. This move is expected to drive up inflation and stall both U.S. and worldwide economic growth. Market strategists noted that the tariffs caught markets off guard, as pre-announcement speculation suggested a flat 15-20% tariff.

Although imports of oil, gas, and refined products were exempted from the new tariffs, the overall impact on global growth and oil demand remains a significant concern. The announcement led to market turmoil, with Japan’s Nikkei plunging to an eight-month low, China’s yuan dropping to its lowest levels in seven weeks, and stock markets slumping in early Asia trade.

Analysts predict increased price volatility in the near term, as countries may negotiate lower tariffs or enact retaliatory levies. Additionally, market participants are awaiting clarity on the OPEC+ production outlook, as the group is set to raise oil output by 135,000 barrels per day in May. The Energy Information Administration’s data showing a surprising increase in U.S. crude inventories further reinforced the bearish sentiment in the market.