Oil Drops Nearly 2% After Trump Threatens 50% Tariff on the EU
Also, ten of the eleven sectors in the S&P 500 were in the red, led by consumer discretionary and information technology.
Quick overview
- Oil prices fell nearly 2% on Friday, marking their first weekly decline in three weeks due to U.S. President Trump's proposed 50% tariff on EU goods.
- Brent crude futures dropped to $63.41 per barrel, while U.S. West Texas Intermediate crude futures fell to $60.13.
- The OPEC+ alliance is expected to meet next week to discuss a planned production hike amid ongoing trade tensions.
- Investor sentiment is shifting towards safer assets, with increased bond demand and a rise in market volatility.
Oil prices tumbled nearly 2% on Friday, heading for their first weekly decline in three weeks, after U.S. President Donald Trump proposed a 50% tariff on goods from the European Union.
Brent crude futures dropped $1.03, or 1.6%, to $63.41 per barrel, while U.S. West Texas Intermediate (WTI) crude futures fell $1.07, or 1.8%, to $60.13.
Market Dynamics Before and After Trump’s Tariff Threat
Oil prices had already been falling for four straight sessions before Trump’s comments, pressured by expectations that OPEC+ could increase output in the coming months. The president announced on Friday his recommendation for a 50% tariff on EU goods starting June 1, citing persistent trade disagreements with the bloc.
The OPEC+ alliance—which includes OPEC members and key partners like Russia—is scheduled to meet next week. Markets expect the group to proceed with a planned production hike of 411,000 barrels per day in July. The alliance may also fully unwind the remaining 2.2 million bpd in voluntary cuts by the end of October, following earlier increases for April, May, and June.
What Investors Are Watching
Investors are also turning their attention to Nvidia’s upcoming quarterly results, set for release Wednesday. The company’s performance is viewed as a bellwether for AI-related investments amid growing uncertainty over U.S. trade policy and its potential impact on the tech sector.
The mix of political uncertainty, fiscal concerns, and escalating trade tensions is pushing investors toward safer assets. Bond demand has increased, and volatility has spiked: the CBOE Volatility Index (VIX), known as Wall Street’s “fear gauge,” jumped to 22.14—its highest level in more than two weeks.
Ten of the eleven sectors in the S&P 500 were in the red, led by consumer discretionary and information technology. Mega-cap and growth stocks declined, with Amazon and Nvidia both dropping more than 1%. The semiconductor sector fell over 2%, while airline stocks such as American Airlines slipped around 2% as well.
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