Oil Falls as Trade Risks Rise and Saudi Cuts Prices
Oil plunged at the open of the week after Saudi Arabia cut the price of its flagship crude by the most in more than two years, and an escalating trade war stoked concerns about a global recession and weakening demand. Global benchmark Brent fell nearly 4% to $63.01 a barrel, its lowest in four years, after dropping 11% last week, while West Texas Intermediate was at $59.93. State producer Saudi Aramco will offload its Arab Light crude to its biggest Asian buyer by $2.30 a barrel for May. The move comes days after the OPEC+ alliance announced an unexpectedly large output increase.
“The market started the week still in the throes of panic,” said Vandana Hari, founder of Vanda Insights in Singapore. “Nobody is willing to take the low end, barring a tsunami of selling.” Top officials of U.S. President Donald Trump have dismissed investor fears of recession and inflation, offering no apology over the weekend for the chaos sparked by broad tariffs. Among the countries pushing back, China—the biggest crude buyer—has announced retaliatory levies against the U.S.
Oil and other industrial and agricultural commodities, as well as equities—have been pushed sharply lower in recent sessions as the tariff wave has crushed risk appetite. Crude’s losses were exacerbated by the OPEC+ alliance’s surprise move to raise output more than expected. The combination of risks to crude demand, coupled with the extra production, has revived concerns about a global surplus.
“It’s going to remain bearish by default for all risk assets until Trump says or signals something that prompts investors to pause and reassess their fears of a recession,” Hari said. Trump has pressed OPEC+ “to cut oil prices,” which he says is needed to reduce inflation and increase pressure on Russia to help end the war in Ukraine. Saudi Arabia has also lowered prices for the U.S. and Europe, though its cuts have been much smaller than for Asian buyers.
Oil metrics are signaling a rapidly loosening environment. The spread between Brent for this December and the same month in 2026 has moved into contango, with the nearer of the two contracts trading below the longer-dated one. That’s a bearish structure.
Among products, gasoline futures fell nearly 3% in New York, hitting their lowest level since February.
Source: Bloomberg
