TOKYO: Oil prices slide more than 3%, deepening last week’s losses, as escalating trade tensions between the United States and China stoked fears of a recession that would reduce the demand for crude.
Brent futures declined US$2.28, or 3.5%, to US$63.30 a barrel, while US West Texas Intermediate (WTI) crude futures lost US$2.20, or 3.6%, to US$59.79. At the session low, both benchmarks hit their lowest since April 2021.
Oil plunged 7% last Friday as China ramped up its own tariffs on American goods – escalating a trade war that has led investors to price in a higher probability of a global recession. Over the past week, Brent lost 10.9%, while WTI dropped 10.6%.
“The primary driver of the decline is concern that tariffs will weaken the global economy,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.
“Additionally, a planned production increase by the Organisation of the Petroleum Exporting Countries and its allies is also contributing to the selling pressure,” he said.
He added that retaliatory tariffs from countries beyond China will be a key factor to watch.
Yoshida predicted that WTI could fall to US$55 or even US$50 if stock market declines persist.
Responding to US President Donald Trump’s tariffs, China last Friday said it would impose additional levies of 34% on American goods.
This merely confirmed investor fears that a full-blown global trade war between the two biggest economies was underway and that the global economy may be at risk of a recession.
Imports of oil, gas and refined products were given exemptions from Trump’s sweeping new tariffs, but the policies could stoke inflation, slow economic growth and intensify trade disputes, weighing on oil prices.
US Federal Reserve chairman Jerome Powell said last Friday that the US President’s new tariffs were “larger than expected” and that the economic fallout, including higher inflation and slower growth, likely would be as well.
Over the weekend, top Organisation of the Petroleum Exporting Countries ministers stressed the need for full compliance with oil output targets and called for over-producers to submit plans by April 15 to compensate for pumping too much. — Reuters
