Crude Under Pressure: Demand Cracks, Supply Surges, and Tariffs Stir Trouble

Crude oil markets are facing mounting pressure as a convergence of bearish forces—ranging from collapsing Asian demand to aggressive OPEC+ supply moves and sweeping U.S. trade tariffs—drives prices to multi-year lows. While brief rebounds have emerged, notably after crude hit a four-year low on April 7, the overall sentiment remains fragile. Weak Asian imports, Saudi Arabia’s steep price cuts, and heightened fears of a global recession are reshaping the oil landscape, with technical indicators and market fundamentals both pointing to persistent downside risks.

Asia’s Oil Appetite Fades Despite Price Plunge

Crude oil imports in Asia fell in Q1 2025, highlighting weakening demand despite earlier forecasts of growth. Imports averaged 26.44 million bpd, down from 27.08 million bpd a year earlier. March saw a rebound, mainly driven by China, as lower global prices encouraged restocking. However, ongoing concerns over global trade disruptions and economic slowdown—exacerbated by President Trump’s sweeping tariffs—cast doubt on whether the March uptick will last, even with oil prices dropping to four-year lows.

Oil Bounces Back, But Tariff Turmoil Looms

Oil prices rebounded over 3.4% on Tuesday after a sharp selloff driven by fears that US tariffs could spark a global recession and weaken energy demand. Brent rose to $64.08 and WTI to $60.70. While recession risks persist—especially amid escalating U.S.-China trade tensions—analysts say falling prices may soon hit a floor as US production becomes less profitable below $60 per barrel.

Saudi Price Shock: Deep Cuts Follow Surprise OPEC+ Supply Surge

Saudi Arabia slashed its oil prices to Asia by $2.30 per barrel—the biggest cut since 2022—just days after OPEC+ announced a surprise output hike of over 400,000 bpd for May. The move, aimed at enforcing discipline within the group, deepened an ongoing price rout driven by fears of weaker demand and US tariff shocks. Despite needing higher prices to balance its budget, Saudi Arabia also made modest price cuts to the US and Europe.

Technical Analysis: Crude Oil Outlook

Crude oil has staged a modest rebound from its April 7 low of $58.69 per barrel, following a sharp 26% decline from its recent peak. The recovery comes after three consecutive sessions of heavy selling, triggered by heightened fears of a global economic slowdown in the wake of President Trump’s sweeping tariff announcement.

As of writing, prices have edged up by 0.5%. However, crude remains below both the 20-period and 50-period Exponential Moving Averages, underscoring the persistence of bearish sentiment in the market.

Technical indicators further support this outlook. The Momentum oscillator continues to print below the 100 mark, and the Relative Strength Index (RSI) remains beneath the 50 level, with readings still hovering in oversold territory—signals that supply-side pressure has yet to ease.

From a technical perspective, key resistance levels to watch are $64.62, followed by $68.20 and $71.86. On the downside, if bearish momentum persists, support may be tested at $58.69, then $57.36, with a further decline possibly targeting $53.69.

Oil Sinks to 4-Year Low as Trade War Fears Rattle Markets

Crude oil prices have reached a four-year low due to rising fears of a global trade war and declining energy demand. Contributing factors include Saudi Arabia’s steep $2.30 price cut for May deliveries, a surprise OPEC+ output hike, a stronger US dollar, and sinking equity markets. Rising global crude inventories and increased oil storage on tankers also pressured prices. However, Middle East tensions, US sanctions on Iran and Russia, and lower US crude stocks are providing some support amid the volatility.

Conclusion

The outlook for crude oil remains clouded by a complex mix of oversupply, weakened demand, and escalating geopolitical and economic uncertainty. While temporary price rebounds offer glimpses of resilience, the broader trend reflects a market under significant strain. Asian demand softness, aggressive OPEC+ actions, and mounting fears of a trade war-induced recession continue to weigh heavily on sentiment. Unless demand fundamentals improve or supply is meaningfully reduced, oil prices are likely to remain volatile and biased to the downside in the near term.