Oil Selloff Rises as Trade War Shakes Global Markets
Oil is headed for a second weekly loss as growing turmoil in global markets fueled by U.S. President Donald Trump’s aggressive trade policies fuel recession fears and a flight from risk.
Brent fell to $63 a barrel, down nearly 4% this week after hitting a four-year low, while West Texas Intermediate neared $60. The selloff has hit stocks, bonds and the U.S. dollar as concerns mount about the impact of U.S. tariffs, including on China, the world’s biggest crude importer.
Key oil market metrics are showing signs of weakness as this month’s slump accelerates. Among them, contango prices — a bearish pattern — have returned to the front of the futures curve, signaling weakening expectations.
Oil has fallen 16% so far in April, joining a broad selloff that has hit most commodities. The U.S. levies include a 145% punitive charge on imports from China, which has retaliated with tariffs of its own as relations between the world’s two largest economies come under immense strain. Crude oil has also been hurt by the decision by OPEC+ to ease supply curbs. “We are clearly heading towards a trade war, a war with no winners; the resulting hit to global growth is now weighing on demand and sentiment in the oil market,” said Charu Chanana, chief investment strategist at Saxo Markets Pte.
“While the brutal selloff in the dollar and Treasuries has not spilled over into oil assets in a significant way, it is something investors need to watch closely.” Earlier this week, the U.S. cut its forecast for global oil demand growth, highlighting concerns about consumption and the deteriorating economic outlook. Worldwide use is now expected to grow by about 900,000 barrels per day in 2025, according to the Energy Information Administration. That’s about 400,000 barrels lower than last month’s estimate.
“High levels of economic uncertainty are challenging macro-sensitive commodities like oil, and we expect prices to remain depressed,” BMI, a unit of Fitch Solutions, said in a note. Additionally, “we are now pricing in a gradual and sustained phase-out of OPEC+ production cuts,” it said.
The drop in oil prices has led to a decline in related products. U.S. gasoline futures have fallen more than 5% this week.
Source: Bloomberg
