The tariffs, which did exclude oil and fuel imports, are still expected to increase equipment and supply costs for energy production, construction and transportation, while potentially creating weaker global energy demand. The decision from key OPEC nations and allies, especially Saudi Arabia and Russia, to triple their expected production increase in May adds extra supplies on top of existing recession fears.

The coincidentally joint announcements from the White House and OPEC caused oil prices to plunge by nearly 7% on April 3 with the U.S. benchmark for oil —front-month NYMEX WTI—hovering just above $66 per barrel, well down from the nearly $78 per barrel when Donald Trump took office in January.

“The world got more complicated, and the outlook is cloudier,” said energy forecaster Dan Pickering, founder and chief and investment officer for Pickering Energy Partners.

“It’s a double whammy because you have OPEC boosting supply, which I think was dangerous to start with, but now you have this issue of tariffs being higher or worse than expected,” Pickering said.

While the Trump administration is making it easier for the oil and gas industry to do business by easing environmental regulations and fast-tracking permitting, the sector is clearly somewhat “disgruntled” with the president now, Pickering said.

“The bloom is off the rose. Now we have to see if the ease of doing business can help offset some of the pain of lower prices,” Pickering said. “I wouldn’t call the energy industry happy right now, but not completely surprised. This was a risk. Oil prices were better under Obama and Biden than they were under Bush and Trump. The Republicans make it easier to do business, but prices have been lower during their regimes.”

Still, the lobbying American Petroleum Institute chose to focus instead on what Trump didn’t do on energy imports.

“We welcome President Trump’s decision to exclude oil and natural gas from new tariffs, underscoring the complexity of integrated global energy markets and the importance of America’s role as a net energy exporter,” API said in a statement.

During late Wall Street trading April 3, the stocks of Big Oil giants such as Chevron and BP were down 5.5% and 6.8% respectively, while independent U.S. oil producers fell more sharply, such as ConocoPhillips at nearly 9% and Occidental Petroleum at more than 10%. Many smaller producers, including Devon Energy and Diamondback Energy, were down 11% or more on the day.

Coincidental timing

The announcement from the so-called OPEC+ group of key OPEC members plus Russia, Kazakhstan and Oman would add 411,000 barrels per day of additional crude oil to global markets starting in May at a time when supply-and-demand fundamentals were already trending weaker.

Still, some of this may be overstated because Saudi Arabia and others are reacting to rising domestic power demand during the upcoming summer months in their countries, and they are not necessarily aspiring to flood the global market in an arms race, said Matt Reed, energy analyst and vice president for Foreign Reports.

“OPEC+ has its own sensible reasons for producing more sooner,” Reed said. “Unfortunately for them, they couldn’t put this decision off much longer because they need to set prices and line up sales for next month.

“It’s just bad luck this decision coincided with Trump’s slapdash tariff announcement.”

Pickering certainly agreed on the not-so-great luck. “The timing is terrible and now it’s more terrible.”

“Forget all the tariff noise. Just on supply and demand, somebody is going to have to blink, or prices are going to $50 [per barrel],” Pickering said, citing a price point where the industry could fall below profitability and drastically reduce activity further.

Already, dealmaking will come to a temporary standstill and budgets will be lowered accordingly, he said. Trump may need to impose greater sanctions on Iranian oil to help balance supply and demand, he added. “If we don’t see that, it’s going to get ugly, or uglier.”

OPEC may be thinking of both rising domestic demand and potential U.S. sanctions on Iranian oil in its decision, said Rystad Energy Chief Economist Claudio Galimberti.

“OPEC may be preparing the groundwork,” Galimberti said. “Trump is still likely to impose maximum pressure on Iran.”

And, while the ultimate results of the tariffs are unknown, he said, the world is now facing a new world order.

“One thing is already clear: the global trading order based on the U.S. as the consumer and borrower of last resort is ending, and the world’s economic and energy system will need to adapt to a new emerging order, whose shape and form we don’t yet know,” Galimberti said.