Oil prices fell more than 3% on Monday, continuing last week's losses as escalating trade tensions between the U.S. and China fueled fears of an economic recession that could reduce crude demand. Brent crude futures dropped $2.28, or 3.5%, to $63.30 per barrel by 00:49 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures fell $2.20, or 3.6%, to $59.79.
Oil prices had already declined 7% on Friday after China increased tariffs on U.S. goods, intensifying a trade war that led investors to boost recession forecasts. Last week, Brent fell 10.9% while WTI dropped 10.6%.
Satoru Yoshida, a commodity analyst at Rakuten Securities, stated, "The main driver of the fall is concerns that tariffs will weaken the global economy." He added that the planned production increase by OPEC+ is adding to selling pressures. He noted that counter-tariffs from countries other than China would be a key factor to watch.
Yoshida also predicted that WTI could fall to $55 or even $50 if the stock market continued to decline. In response to Trump's tariffs, China announced on Friday that it would impose an additional 34% tariff on U.S. goods, heightening investor concerns over a potential global trade war and the risk of a global economic recession.
While imports of oil, gas, and refined products were exempt from Trump's new comprehensive tariffs, these policies could exacerbate inflation, slow economic growth, and increase trade disputes, casting a shadow over oil prices. U.S. Federal Reserve Chairman Jerome Powell stated on Friday that Trump's new tariffs were "larger than expected," and the likely economic impacts, including higher inflation and slower growth, are also likely to exceed expectations.
At the start of the week, OPEC+ ministers emphasized the need to fully adhere to oil production targets and urged members who exceeded their limits to present plans by April 15 to compensate for overproduction.