Oil prices slid 2% to a near four-year low on Monday on worries U.S. President Donald Trump's latest trade tariffs could push economies around the world into recession and reduce global demand for energy.
Brent futures fell $1.37, or 2.1%, to settle at $64.21 per barrel, while U.S. West Texas Intermediate crude futures fell $1.29, or 2.1%, to settle at $60.70.
That pushed both crude benchmarks, which fell about 11% last week, to their lowest closes since April 2021.
The session was marked by extreme volatility with intraday prices down more than $3 a barrel overnight and up over $1 Monday morning after a news report said Trump was considering a 90-day pause on tariffs. White House officials quickly denied the report, sending crude prices back into the red.
Confirming investor fears that a full-blown global trade war has begun, China, the world's second-biggest economy behind the U.S., said on Friday it would impose additional levies of 34% on American goods in retaliation for Trump's latest tariffs.
Trump responded that the U.S. would impose an additional 50% tariff on China if Beijing does not withdraw its retaliatory tariffs on the U.S., and said "all talks with China concerning their requested meetings with us will be terminated."
Goldman Sachs forecast a 45% chance of recession in the U.S. over the next 12 months, and made downward revisions to its oil price projections. Citi and Morgan Stanley also cut their Brent outlooks. JPMorgan said it sees a 60% probability of recession in the U.S. and globally.
In addition to growing recession worries, there are growing concerns that the Trump administration's policies will cause the price of goods to increase.
The Fed and other central banks use higher interest rates to combat inflation. Higher interest rates, however, boost consumer borrowing costs and could cause economic growth and oil demand to decrease.
SUPPLIER REACTION
Saudi Arabia on Sunday announced sharp cuts to crude oil prices for Asian buyers, dropping the price in May to the lowest level in four months.
"It's a demonstration of the belief that tariffs will hurt oil demand," said PVM analyst Tamas Varga. "It goes to show the Saudis, just like every man and his dog, expect the supply and demand balance to be affected and they are forced to cut their official selling prices."
Adding to the downward momentum, the OPEC+ group comprising the Organization of the Petroleum Exporting Countries and its allies decided to advance plans for output increases. The group now aims to return 411,000 barrels per day to the market in May, up from the previously planned 135,000 bpd.
During the weekend, OPEC+ ministers emphasised 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.
