Oil prices plunged Thursday on fears that President Trump’s latest round of tariffs will slow economic growth around the world, curbing demand for gasoline, diesel, jet fuel and other forms of energy.
The U.S. oil price fell about 7 percent on Thursday, settling at just below $67 a barrel, around mid-March levels. Prices for many metals, including copper, silver and gold, also fell sharply.
Mr. Trump had sought to insulate the U.S. energy industry from a trade war by exempting energy and certain minerals from the tariffs he announced on Wednesday. But the broader impact of his tariffs is likely to outweigh any effort by the administration to protect specific sectors.
An exchange-traded fund composed of U.S. oil and gas companies closed down more than 10 percent on Thursday, more than twice as much as the S&P 500 stock index. Shares of Exxon Mobil, the largest U.S. oil company, closed down more than 5 percent, and Chevron’s stock closed down more than 6 percent.
The combination of lower oil prices and higher costs for essential materials like steel pipe threatens to squeeze domestic oil and gas producers. There is also a risk that some countries could target oil and natural gas — key U.S. exports — if they retaliate against the tariffs Mr. Trump has put in place. The president has imposed particularly steep tariffs on some of the biggest markets for U.S. energy, including China, Japan and members of the European Union.
Companies generally need prices above $60 a barrel in order to make money drilling new oil wells in the United States.
Adding to pressure on oil prices, the Organization of the Petroleum Exporting Countries and its allies said on Thursday that they would increase production more quickly than anticipated. The group has been voluntarily holding back output to keep prices elevated.
“While the meeting was known, the announcement comes as a surprise, particularly after President Trump’s newly announced tariffs,” TPH & Company analysts wrote in a note to investors.