Commodity Markets Rattle as Trade War Escalates and Oil Prices Tumble

Global commodity markets are experiencing fresh volatility as geopolitical tensions and aggressive trade policy measures disrupt investor sentiment. On April 9, 2025, U.S. President Donald Trump escalated trade hostilities with new tariffs, triggering a domino effect across energy, metals, and agricultural commodities.

The most significant impact came from Trump’s decision to impose a 104% tariff on Chinese imports, prompting China to retaliate with heavy tariffs of its own. These developments sparked fears of a global economic slowdown, pushing investors toward safe-haven assets and away from growth-sensitive commodities.

Oil Slumps to Four-Year Low on Demand Fears

The energy sector was hit particularly hard. Brent crude fell 3.79% to $60.44 per barrel, while U.S. West Texas Intermediate (WTI) declined 4.13% to $57.12—both reaching levels not seen since 2021. The sharp drop reflects growing concerns that worsening trade disputes will suppress global energy demand.

Further compounding the pressure, OPEC+ announced plans to raise output by 411,000 barrels per day in May. The move, intended to stabilize member revenues, has instead fueled fears of a supply glut amid waning demand.

According to Reuters, oil has now logged its steepest five-day drop since 2022. Investors are watching closely for updates from both OPEC+ and the White House, which could dictate the next moves in crude markets.

Natural gas prices also dipped slightly, while gasoline and heating oil futures mirrored the weakness in crude benchmarks.

Base Metals Slide While Gold Shines Amid Risk-Off Mood

In metals, the effects of trade tensions were equally dramatic. Copper prices dropped nearly 10%, hitting an eight-month low on the Shanghai Futures Exchange. The red metal, often viewed as a bellwether for global growth, has suffered as traders anticipate a slowdown in industrial activity.

Iron ore prices on the Dalian Commodity Exchange slipped over 3%, while aluminum and nickel also declined, reflecting broad bearish sentiment in industrial metals.

On the flip side, gold prices surged as investors sought refuge from equity and currency market turbulence. Comex gold futures for April delivery rose 3% to $3,056.50, notching the yellow metal’s strongest one-day performance since October 2023. Silver also gained, supported by safe-haven flows and inflation hedge interest.

Commodity ETFs have mirrored this volatility:

• SPDR Gold Shares (GLD): up 3.66%
• United States Oil Fund (USO): down 6.62% over the week
• iShares S&P GSCI Commodity-Indexed Trust (GSG): fluctuating with broad exposure

You can track commodity ETF performance and insights at S&P Global Commodity Insights.

With tensions between the U.S. and China continuing to unfold, traders remain cautious. Further policy announcements, central bank responses, and global macro data will be critical to determining where commodity markets head next. As volatility remains high, both institutional and retail investors are advised to stay nimble and well-informed.