Oil prices slumped to a four-year low Wednesday in anticipation of slowing economic growth and reduced energy demand, both casualties of a trade war that began after President Donald Trump ordered widespread tariffs against the imports of U.S. trading partners.
U.S. benchmark crude fell 4.3% to $56.98 per barrel in midday trading 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 have fallen remarkably fast, with the cost of a barrel of oil sliding by more than $20 since the start of the year. At this time last year, a barrel of U.S. crude cost $85, or 34% more than it does now. A barrel was going for around $71 at the beginning of April, before tariffs were launched.
Brent crude, the European standard, fell $2.36 to $60.46 per barrel.
The most recent swoon in energy prices arrived when Trump’s latest round of tariffs kicked in after midnight, including a 104% tax on goods coming from China. The world’s second-largest economy quickly retaliated, with Beijing saying it would raise tariffs on imported U.S. goods to 84% on Thursday.
European Union member states followed suit, issuing retaliatory tariffs on $23 billion in goods. For now, the targeted items are a tiny fraction of the 1.6 trillion euros ($1.8 trillion) in U.S.-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 as the trade war scrambles expectations for business and household spending and depresses bookings across the travel sector.
“With broad economic uncertainty around global trade, growth has largely stalled,” said Delta CEO Ed Bastian.
Shares of major U.S. 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.”