Week in Review: Tariffs Turn Up the Heat as Oil Prices Cool

Fuel markets saw a steep decline this week, with diesel and gasoline futures both falling around 12 cents today, and crude dropping over $5 per barrel. The plunge came after Trump announced new import tariffs, even though they excluded energy products. China retaliated with a 34% tariff on U.S. goods, stoking concerns of an economic slowdown that could weaken global energy demand.

Tariffs could give the U.S. administration more room to tighten sanctions on oil-exporting nations like Iran, Venezuela, and Russia. Lower oil prices might pressure these countries financially, but the outlook is complicated. While reduced demand growth could amplify the impact of sanctions, U.S. allies may be less willing to cooperate amid rising trade tensions. Notably, China, already a major buyer of sanctioned oil, may be further incentivized to bypass U.S. sanctions.

Experts also caution that broad trade conflicts and legal uncertainties could deter long-term energy investments and contracts, reshaping global supply chains. Although the U.S. could use this environment to apply greater pressure on oil producers, domestic production risks falling as well, reducing market flexibility. Additionally, countries like Russia may be more resilient due to alternative revenue streams, limiting the effectiveness of economic pressure.

At the same time, OPEC+ announced plans to increase production in May by 411,000 bpd – effectively fast-tracking three months of planned increases. The announcement, layered over a fragile market already facing supply surpluses and slowing demand forecasts, only added to bearish sentiment. Brent crude slid another 7% following the news, deepening losses tied to escalating U.S.–China trade tensions.

Together, these factors pushed oil prices to their lowest levels in over two years, with both Brent and WTI crude futures seeing their largest weekly losses since 2021. Analysts, including Goldman Sachs, have since lowered their price forecasts. Goldman cut its Brent and WTI forecasts for December 2025 by $5 each to $66 and $62/bbl, citing weaker global growth and heightened market volatility. The bank now expects slower oil demand growth of just 0.6–0.7 Mbpd in 2025 through 2026, down from 0.9 Mbpd.

Geopolitical risks also remained in focus, with Russia and Ukraine exchanging accusations over energy infrastructure attacks. Mexico has also unveiled plans to boost domestic fuel production by 30% by 2030, while India’s largest refiner forecasted gasoline demand peaking by 2035 as the country pursues net-zero targets.

Prices in Review

Crude prices opened at $69.43 on Monday and initially climbed to a weekly high of $71.39 on Tuesday. However, the momentum quickly reversed, with prices slipping slightly to $71.20 on Wednesday and continuing lower to $70.38 on Thursday. The steepest decline came by Friday morning, when crude opened at $66.54. Overall, crude prices fell by $2.89, or approximately 4.16%, for the week.

Diesel prices opened at $2.2745 on Monday and saw modest gains early in the week, peaking at $2.2914 on Wednesday. However, the trend switched late in the week, with prices sliding to $2.2795 on Thursday and dropping sharply to $2.1805 by Friday morning. Overall, diesel prices fell by $0.0940, or approximately 4.13%, for the week.

Gasoline prices opened at $2.2347 on Monday and climbed steadily through midweek, reaching a high of $2.3025 on Thursday. However, the market reversed sharply by Friday, with prices falling to $2.1528, the lowest point of the week. Overall, gasoline prices declined by $0.0819, or approximately 3.67%, for the week.