Oil prices plunged 7% on Friday to settle at their lowest in over three years as China ramped up tariffs on U.S. goods, escalating a trade war that has led investors to price in a higher probability of recession.

Oil prices plunged 7% on Friday, settling at their lowest close in more than three years, as China ramped up tariffs on U.S. goods, sharply escalating a global trade war that has investors worried about a recession.

Venezuela owes China’s banks about $10 billion, and its oil is about the only legal way it has to pay them back.

Stock indexes tumbled on Thursday, with the S&P 500 down more than 4%, while the U.S. dollar weakened and oil prices fell more than 6% as President Donald Trump’s drastic U.S. trade tariffs stoked fears of a global recession and led investors to seek safe-haven assets like bonds and the yen.

The combination of lower oil prices and higher costs for essential materials like steel pipe threatens to squeeze domestic oil and gas producers.

Energy prices got slammed by fears of a global economic slowdown stemming from President Trump's tariff plan, and OPEC and its market allies piled pressure onto the U.S. energy industry by open up the spigots.

Major oil producers announced a bigger-than-expected output boost for May, even as Trump’s tariffs tank crude prices.

Friday closed down -4.96 (-7.41%), and May RBOB gasoline (RBK25) closed down -0.1098 (-5.07%). Crude oil and gasoline prices on Friday sank for the second day, with crude falling to a 4-year low and gasoline sliding to a 1-month low.

U.S. oilfield service firms are bracing for a hit as President Donald Trump's tariffs throw supply chains into disarray and tumbling oil prices set the stage for a drop in drilling activity, analysts and financial firms said on Friday.