Oil prices dropped sharply to $65 per barrel this week after the United States imposed new import tariffs and an unexpected supply increase from OPEC+ flooded the market, wiping $10 off global benchmarks.

This followed a brief rally last week when U.S. President Donald Trump announced tariffs on countries purchasing crude oil from Venezuela, tightening supply and pushing prices higher.

Oil prices took a sharp downturn on Friday, with Brent crude dropping to $65 per barrel — its lowest level since August 2021.

According to Oilprice.com, the decline was driven by a combination of factors: former President Trump’s new import tariffs, OPEC+’s poorly timed decision to accelerate the rollback of production cuts, and retaliatory actions from China. Together, these developments wiped $10 off the price of a barrel, pushing ICE Brent below the $65 mark for the first time in nearly four years.

The US West Texas Intermediate crude futures lost $4.96, or 7.4 per cent to end at $61.99.

“Seeing backwardation barely change compared to the beginning of the week, one could assume that US tariffs are the defining factor for the price change. Nevertheless, this week will not go down well in the history of oil markets,” oilprice.com reports.

China’s retaliatory tariffs on U.S. goods have intensified the ongoing trade war, prompting investors to factor in a higher likelihood of a global recession.

China, the world’s largest oil importer, has announced it will impose additional tariffs of 34% on all U.S. goods starting April 10.

According to Reuters, countries across the globe are preparing countermeasures after former President Trump raised tariffs to their highest levels in over a century.

Aside from the tariffs, another factor that further pressured oil prices was the Organisation of the Petroleum Exporting Countries and Allies’ decision to advance plans for output increases.

The group now plans to restore 411,000 barrels per day to the market in May, a significant increase from the earlier target of 135,000 bpd.