Oil Sinks to Four-Year Low Amid Tariff War: Is a Tactical Crude Rebound on the Horizon?

Brent and West Texas Intermediate (WTI) crude oil prices have fallen to their lowest in four years, with both dropping 16% in just a week. The drop was set off by China meting out a retaliatory 84% tariff on U.S. oil, just as the Trump administration was pushing its own aggressive 104% tariff hike. Brent now goes for USD 60.35 a barrel, while WTI hovers near USD 57.23 after a sharp midweek drop that saw it lose as much as 7%.

In the current context, the main challenges emerge from the following factors:

1. Mounting global risks (climate change, food insecurity, pandemics etc.) are not being sufficiently funded.

2. Debt vulnerability and restructuring are not being adequately addressed.

3. Global growth is increasingly dependent on the Bank's scale.

4. Resource mobilization for transforming investment landscapes is not generating enough funds.

5. The private sector, often seen as a game changer, is nearly missing in action.

Global Demand Fears, Policy Uncertainty Compound Pressure

The market's selloff is a direct consequence of the intensifying concerns about a downturn in worldwide growth and a softening demand for oil. Ever since Trump's tariff announcement on April 2, the price of oil has dropped by almost 20 percent, its worst five-day slide since early 2022.

Goldman Sachs and Morgan Stanley analysts have reduced their 2025 oil forecasts, estimating that by year's end the Brent price will be around USD 62 and WTI around USD 58. In fact, they see the oil market weakening further, into 2026 and beyond, as a plentiful global supply, coupled with some anticipated softness in demand, works to keep prices down.

MCX Crude at Key Technical Levels

As per the commodity analyst Gyan Ranjan Singh, the MCX crude oil broke a major support level around INR 4,975 and has formed a descending triangle, a bearish continuation pattern. Our Momentum indicators show RSI near 21 (deeply oversold), while the increased volume during the breakdown confirms bearish control.

The next crucial support level has been defined by Singh at INR 4,666, with near-term stability possibly being found around INR 4,800–4,870. Despite the dismal technicals, the formation of an oversold setup gives room for a tactical recovery scenario if confirmation signals come in.

Tactical Bullish Setups for Short-Term Traders

The oversold condition offers an opportunity for traders to take short-term bullish positions and bet on recovery. Traders might look for an entry point between 4,800 and 4,870, with a stop-loss set at 4,600. If we go back to when the stock was in the 5,380 to 5,535 range, that kind of target might be considered a reasonable upside.

Candlestick reversal patterns or RSI divergence should be waiting for swing traders to initiate positions. Yet volatility is what it is. Hence, we must manage risk. In swing trading, this can translate into using smaller position sizes and employing trailing stops in order to navigate the resistance zones the price attempts to rebound from.