- US oil prices tanked more than 7.5% on Thursday.
- Trump's tariffs are battering energy markets as recession fears climb.
- A surprise decision by OPEC+ to boost oil output accelerated the decline.
The market meltdown is reaching beyond stocks, as the latest batch of US tariffs pummels crude prices to a seven-month low. A surprise decision from the Organization of Petroleum Exporting Countries is further bruising oil traders.
US crude tanked 7.63% around midday Thursday, hitting $66.25 per barrel. Brent crude, the international benchmark, plummeted 6.96%.
Investors are reacting to a double-whammy that began with a major escalation of President Donald Trump's trade war. On Wednesday, the White House announced a slate of higher-then-expected tariffs on a list of world economies, amplifying growth fears.
Recession odds now stand as high as 53% on betting markets like Kalshi, and rate cut bets have jumped as traders see the Fed slashing borrowing costs to blunt the impact of a recession.
This anxiety has an indirect impact on oil products, according to David Morrison, senior market analyst at Trade Nation.
"Energy imports are largely unaffected tariff-wise. But investors were reacting to the estimated damage these tariffs could do to global trade, and therefore global economic growth."
To make matters worse, OPEC+ announced that eight of its members would boost crude production by 411,000 barrels a day next month. Though the cartel was expected to end some of its production cuts, the increase is three times higher than previously indicated.
The group spent years holding back production in a failed effort to boost energy prices that support member economies. OPEC delegates told Bloomberg that the output boost is an effort to penalize other members who have not kept with agreed-upon quotas. In the past, this has included Kazakstan and Iran.
The action may be to Trump's benefit, as the president has called on OPEC to help reduce crude pricing. However, it could reignite worry of a supply glut in the global market, especially if a recession weighs down on energy demand.
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