Energy demand, oil prices swing amid global uncertainty

Oil prices swung wildly on Wednesday, sinking to a four-year low in anticipation of slowing economic growth due to a burgeoning trade war, before jumping two per cent after the announcement of a 90-day pause on most of the new US tariffs.

US benchmark crude followed US markets higher in the afternoon rising by US$1.20 to US$60.79 per barrel after the latest reversal by the Trump administration.

That’s after it declined 4.3 per cent to US$56.98 per barrel as late as midday on the New York Mercantile Exchange. Prices had fallen further earlier in the day to levels not seen since February 2021, the depth of the COVID-19 pandemic.

Energy prices mostly have been in decline since Trump’s inauguration in January, with the cost of a barrel of oil sliding about US$20 since the start of the year. At this time last year, a barrel of US crude cost US$85. A barrel was going for around US$71 at the beginning of April, before tariffs were launched.

Brent crude, the European standard, also climbed into positive territory Wednesday to US$63.90 per barrel.

The most recent swoon in energy prices arrived when Trump’s latest round of tariffs kicked in after midnight, including a 104 per cent tax on goods coming from China. The world’s second-largest economy quickly retaliated, with Beijing saying it would raise tariffs on imported US goods to 84 per cent on Thursday.

European Union member states followed suit, issuing retaliatory tariffs on US$23 billion in goods. For now, the targeted items are a tiny fraction of the €1.6 trillion (US$1.8 trillion) in US-EU annual trade.

Rapidly falling oil prices signal pessimism about economic growth and can be a harbinger of a recession as manufacturers cut production, businesses cut travel costs and families rethink vacation plans.

Delta Air Lines, which had anticipated a record year, pulled its financial forecasts for 2025 on Wednesday amid depressed bookings across the travel sector.

“With broad economic uncertainty around global trade, growth has largely stalled,” said Delta CEO Ed Bastian.

Shares of major US oil companies fell as well Wednesday.

“We are going into a recession,” Neil Dutta of Renaissance Macro Research wrote in a note to clients. “I don’t think it is especially controversial to say so.”

AP