Oil prices dipped to their lowest point in over four years at the start of trading on Wednesday due to concerns about diminishing demand. This was influenced by the escalating trade tensions between the U.S. and China, the world's leading economies, as well as an increase in the projected oil supply.

Brent futures dropped $2.13, down 3.39%, to $60.69 per barrel, while U.S. West Texas Intermediate crude futures fell $2.36, a 3.96% decrease to $57.22. Brent hit its lowest level since March 2021 and WTI since February 2021.

Both benchmarks have experienced declines over the past five sessions since President Trump announced extensive tariffs on most imports. This has raised concerns about the potential impact of a global trade war on economic growth and fuel demand.

The U.S. government is set to impose a 104% tariff on Chinese products, with the deadline set for 12:01 a.m. EDT. Beijing has stated it will not yield to what it perceives as U.S. pressure, leading to fears that an extended trade war could result in an economic downturn worldwide. Ye Lin, vice president at Rystad Energy, highlighted the risk to China's oil demand growth due to these escalating tensions.

Furthermore, a recent decision by OPEC+ to increase oil production by 411,000 barrels per day from May is expected to lead to a surplus in the market. Analysts predict further drops in oil prices, with Goldman Sachs forecasting prices to fall to $62 for Brent and $58 for WTI by December 2025, and even lower by 2026.

Despite the declining oil prices, there was a positive indication for demand from the American Petroleum Institute, which reported a decrease of 1.1 million barrels in U.S. crude inventories. Official inventory data from the Energy Information Administration is expected later in the day.