Oil Prices Plunge Further As U.S.-China Trade Tensions Stoke Recession Fears
Oil prices plunged more than 3% on Monday, extending last week’s losses, as escalating trade tensions between the United States and China stoked fears of a recession that would dent crude demand.
Brent crude futures fell $1.41, or 2.15%, to settle at $64.17 a barrel by 0514 GMT, while U.S. West Texas Intermediate crude futures fell $1.35, or 2.18%, to settle at $60.64. At their session lows, both benchmarks were down more than 3% and hit their lowest levels since April 2021.
Oil prices plunged 7% on Friday as China raised tariffs on U.S. goods, escalating a trade war that has investors pricing in a higher chance of a recession. Last week, Brent fell 10.9%, while WTI dropped 10.6%.
“It’s hard to see crude prices falling unless the panic in the market subsides, and it’s hard to see that happening unless Trump says something to stop the growing fears of a global trade war and recession,” said Vandana Hari, founder of oil market analytics provider Vanda (NASDAQ:VNDA) Insights.
In response to U.S. President Donald Trump’s tariffs, China said Friday it would impose additional levies of 34% on American goods, confirming investor fears that a global trade war is underway.
Imports of oil, gas and refined products are exempt from Trump’s sweeping new tariffs, but the policy could stoke inflation, slow economic growth and intensify trade disputes, weighing on oil prices.
Federal Reserve Chairman Jerome Powell said Friday that Trump’s new tariffs were “larger than expected,” and that economic impacts including higher inflation and slower growth were also likely. Adding to the downward momentum, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) decided to move forward with plans to increase output. The group now aims to return 411,000 barrels per day (bpd) to the market in May, up from the previously planned 135,000 bpd.
“This potential influx of supply, reversing the cuts maintained for the past two years, is a major shift in market dynamics and acts as a significant headwind for prices,” said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.
Over the weekend, OPEC+’s top ministers stressed the need for full compliance with oil output targets and asked overproducing producers to submit plans by April 15 to compensate for pumping too much.
On the geopolitical front, Iran on Sunday rejected U.S. demands for direct nuclear talks or face attack. Russia claimed to have seized Basivka in Ukraine’s Sumy region and said its forces attacked nearby settlements.
Source: Investing.com
