Oil prices dropped significantly on Friday, falling by 8% as tensions between the US and China escalate. This marks the lowest oil prices since the peak of the COVID-19 pandemic in 2021. Brent crude fell to $64.84 a barrel, while US West Texas Intermediate (WTI) dropped to $61.48, both facing their largest weekly losses in over two years. The decline is partly due to China’s response to recent US tariff hikes. Starting April 10, China plans to impose a 34% tariff on all US goods. Ole Hansen, a commodity strategist, warned that this trade conflict will hurt global economic growth and reduce demand for oil. Additionally, the Organization of the Petroleum Exporting Countries (OPEC) and its allies decided to increase oil production by 411,000 barrels per day in May. This increase raises concerns of oversupply in the global oil market. Although the US tariffs exempt oil and gas imports, the overall economic impact will likely slow growth and raise inflation. In light of these developments, Goldman Sachs analysts revised their oil price forecasts downwards. They lowered the Brent and WTI price targets by $5 to $66 and $62 per barrel, respectively. Analysts believe that recession risks and increased OPEC+ supply could further push prices down in the future.