Oil prices swooned on April 3 to settle with their steepest percentage loss since 2022, after OPEC+ agreed to a surprise increase in output the day after U.S. President Donald Trump announced sweeping new import tariffs.

Brent futures settled at $70.14/ bbl, down $4.81, or 6.42%. U.S. West Texas Intermediate crude futures finished at $66.95/ bbl, down $4.76, or 6.64%.

Brent was on course for its biggest percentage drop since Aug. 1, 2022, and WTI its biggest since July 11, 2022.

At a ministers' meeting on April 3, OPEC+ countries agreed to advance their plan for oil output hikes, now aiming to return 411,000 bbl/d to the market in May, up from 135,000 bbl/d initially planned.

"The economy and oil demand are inextricably linked," said Angie Gildea, KPMG U.S. energy leader.

"Markets are still digesting tariffs, but the combination of increased oil production and a weaker global economic outlook puts downward pressure on oil prices - potentially marking a new chapter in a volatile market."

Oil prices were already trading some 4% lower prior to the meeting, with investors worried Trump's tariffs would escalate a global trade war, curtail economic growth and limit fuel demand.

Trump on April 2 unveiled a 10% minimum tariff on most goods imported to the U.S., the world's biggest oil consumer, with much higher duties on products from dozens of countries.

Imports of oil, gas and refined products were exempted from the new tariffs, the White House said on April 2.

UBS analysts on April 2 cut their oil forecasts by $3/ bbl over 2025-2026 to $72/ bbl.

Traders and analysts now expect more price volatility in the near term, given the tariffs may change as countries try to negotiate lower rates or impose retaliatory levies.

"Countermeasures are imminent and judging by the initial market reaction, recession and stagflation have become terrifying possibilities," said PVM analyst Tamas Varga.

"As tariffs are ultimately paid for by domestic consumers and businesses, their cost will inevitably increase, impeding the rise in economic wealth," Varga said.

Further weighing on market sentiment, U.S. Energy Information Administration data on April 2 showed U.S. crude inventories rose by a surprisingly large 6.2 MMbbl last week, against analysts' forecasts for a decline of 2.1 MMbbl. 

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