Oil prices plunged Thursday on fears that President Trump’s latest round of tariffs would slow economic growth around the world, curbing demand for gasoline, diesel, jet fuel and other forms of energy.
The U.S. oil price was down more than 7 percent Thursday morning, trading below $67 a barrel, or 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 will likely outweigh any effort by the administration to protect specific sectors.
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.
An exchange-traded fund composed of U.S. oil and gas companies fell more than 6 percent as markets opened Thursday, about twice as much as the broader S&P 500 stock index. Shares of Exxon Mobil and Chevron, the two largest U.S. oil companies, were down about 3 percent.
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 OPEC oil cartel 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 & Co. analysts wrote in a note to investors.
