Oil prices plunged for the second consecutive day, reaching the lowest level in over three years in response to unexpected moves by OPEC+ and US President Donald Trump's proposed tariffs that could dampen demand. The global benchmark Brent saw a drop of more than 10% within two days, while US futures are currently at their lowest point since May 2023.

On Thursday, Trump's announcement of potential tariffs sparked the initial decline, which was further exacerbated when OPEC and its allies decided to triple their planned production increase for May as a deliberate measure to lower prices and penalize members exceeding their production quotas.

This retreat in crude prices represents an effort to break free from the narrow trading range of around $15 that has persisted over the last six months. The unexpected surge in production this week has raised uncertainties about the alliance's commitment to maintaining higher prices.

The combination of increased production by OPEC+ and the looming tariffs has prompted traders and financial institutions like Goldman Sachs and ING Groep to revise their market outlook. The risks of escalating tariffs and higher OPEC+ output have increased price volatility, leading to concerns about a possible economic downturn.

Although market indicators such as timespreads have softened, suggesting a more relaxed supply-demand balance, the surge in bearish oil options volumes highlights the apprehension among investors. Despite the downturn, the threat of supply disruptions due to US sanctions on oil-producing nations like Iran and Venezuela may prevent prices from remaining below $70 for an extended period.

Mukesh Sahdev, the global head of commodity markets at Rystad Energy, pointed out that the risk of potential supply disruptions could support oil prices and prevent a prolonged dip below the $70 mark.