US Crude Oil Futures Drop Below $60 per Barrel to Lowest Level in 4 Years

Oil drilling activity in the United States could be negatively affected by deflated prices.

Oil extraction platforms pump oil in Bakersfield, Calif., on March 20, 2025. John Fredricks/the Epoch Times

WTI crude oil futures, a benchmark for U.S. light oil, dropped to $58.95 per barrel in early trading on April 7, the lowest level since mid-April 2021, as fears of a recession and expectations of increased supply continued to put downward pressure on prices.

Brent crude oil futures fell to a low of $62.51 per barrel, their lowest level in roughly four years. WTI was trading 2.61 percent lower for the day, as of 8:15 a.m. ET, while Brent futures were down 2.47 percent.

Since the April 2 closing, both WTI and Brent crude oil prices have fallen by roughly 15 percent.

The decline follows President Donald Trump’s announcement of reciprocal tariffs on America’s trade partners. Under the policy, the United States has imposed a baseline tariff of 10 percent on all nations. Additional reciprocal tariffs have been applied on a case-by-case basis, with China facing a 34 percent increase, raising its total tariffs to 54 percent. The European Union faces a 20 percent tariff, while Japan was hit with a 24 percent tariff. Those higher tariffs are set to be implemented on April 9.

Trump justified the tariffs as a crucial tool to deal with America’s trade deficit.

“Chronic trade deficits are no longer merely an economic problem,” he said in early April. “They’re a national emergency that threatens our security and our very way of life.”

The tariffs have resulted in concerns of a U.S. recession. Just a few days before the announcement, Goldman Sachs raised the probability of the United States entering a recession within the next 12 months from 20 percent to 35 percent.

A day after the tariffs were announced, S&P Global bumped up the probability of a recession within the next 12 months from 25 percent in March to a range of 30–35 percent.

Treasury Secretary Scott Bessent recently rejected the possibility of the United States entering a recession following the tariff announcements.

Bessent said he was not concerned with the negative reaction in the stock market, saying the market has always underestimated Trump.

Oil markets are also reacting to the announcement as OPEC+ recently said it would boost a planned May increase in output by a higher-than-expected amount. The imminent addition of more supply puts further downward pressure on oil prices.

“Oil prices have had their worst week since October 2023, with risk assets getting hit by US President Donald Trump’s reciprocal tariffs and the retaliation we have started to see towards them,” ING Bank said in an April 7 social media post. “The scale of tariffs, combined with the decision from OPEC+, clearly took speculators by surprise. This is reflected in the ferocity of the sell-off in oil. ... The scale of the sell-off suggests the market is pricing in a significant demand hit as recession fears grow.”

The weak WTI oil prices are also likely to result in a “severe slowdown” in oil drilling activity in the United States, ING said.

While the oil rig count increased by five sites over the past week, the bank expects the trend to “quickly reverse” given the current WTI prices.

“The latest Dallas Fed Energy Survey shows that US producers need, on average, $65/bbl to profitably drill a new well, compared to a spot WTI price of a little over $60/bbl, while forward prices are sub-$60/bbl,” the bank said. “A reversal in drilling in the US would mean it doesn’t take long to start seeing US oil production declining.”

The U.S. dollar index, which fell after the tariff announcement, recouped some of its losses since then.