Oil tanks 6% amid 'panic selling' as Trump tariffs, OPEC+ supply increases send prices reeling
The price of West Texas Intermediate (CL=F) crude oil, the US benchmark settled at $66.95 per barrel. Brent (BZ=F), the international benchmark traded near $70 a barrel.
"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," Dennis Kissler, senior vice president for trading at BOK Financial Securities, told Yahoo Finance on Thursday morning.
Energy (XLE) related equities also led to the downside amid a market sell-off as the Dow (^DJI), S&P 500 (^GSPC) and Nasdaq (^IXIC) all plummeted.
Following Trump's tariff announcement on Wednesday, the Organization of Petroleum Exporting Countries and its allies, OPEC+, agreed to hike supply more than expected beginning in May.
'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," said KPMG US energy leader Angie Gildeaon Thursday morning.
This decision will add 411,000 barrels per day to the global oil market, and this news deepened losses that began late Wednesday after the Trump administration announced sweeping tariffs on its trading partners.
Although energy was exempt from the levies announced on Wednesday, the move escalated Trump's global trade war and raised concerns about demand should economic growth slow worldwide as a result of these rejiggered trade arrangements.
Read more: What Trump's tariffs mean for the economy and your wallet
For instance, tariffs on goods imported from China are now set to total 54%; the country is the world's largest importer of crude oil.
"[The] 54% tariff on China is a significant negative surprise," CIBC Private Wealth senior energy trader Rebecca Babin told Yahoo Finance. "The tariffs on growing emerging economies that contribute most to crude demand growth (not absolute demand) are getting hit the hardest."
Ahead of these announcements, oil prices had been rallying after recent moves from the Trump White House — including pressure on Iran to agree to a nuclear deal, tariff threats on imports from countries that buy crude from Russia, and "secondary tariffs" on Venezuelan energy — pointed to a tighter global supply environment.
On Wednesday, gas prices in the US reached their highest level since September, as this rally in oil prices had pushed the average price of a gallon of gas toward $3.25 a gallon.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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