- Oil prices fell over 3% amid growing US-China trade tensions.
- Fears of a global recession and OPEC+ output increases hit investor confidence.
- Brent and WTI hit their lowest levels since April 2021.
Oil prices took another hit on Monday, deepening last week’s losses, as escalating US-China trade tensions sparked fears of a global recession. Brent crude dropped by $1.41 to $64.17 per barrel, while WTI slid by $1.35 to $60.64.
On the supply side, OPEC+ announced plans to increase production by 411,000 barrels per day in May. This is triple its previously intended boost. This unexpected move further pressured oil markets already rattled by slowing demand forecasts.
Global Oil Markets Under Pressure from Trade War, Rising Supply, and Geopolitical Risks
Four Concise Paragraphs:
Monday’s oil sell-off followed a brutal week where Brent and WTI both dropped over 10%. The continued decline reflects investor unease about the deepening trade conflict between the world’s two largest economies. Although energy products have been spared from direct tariffs, the broader implications of slowing trade weigh heavily on demand expectations.
Federal Reserve Chair Jerome Powell warned that the economic fallout from the latest tariffs could bring higher inflation and reduced growth. These comments reinforced the idea that the US-China standoff may not be a short-term issue. It could significantly dampen global consumption, especially in energy-hungry sectors.
The announcement from OPEC+ to ramp up production marks a shift in the group’s strategy. Ministers urge full compliance and ask overproducers to submit plans to balance their output. The move comes despite weaker demand forecasts, creating a potential surplus. This could depress prices further if economic conditions deteriorate.
Beyond economic factors, tensions in the Middle East and Eastern Europe contribute to a volatile environment. Iran’s refusal to engage in direct nuclear talks with the US and Russia’s intensified offensive in Ukraine spark fears of regional disruptions. However, at present, the market’s primary concern is not supply shock — it’s demand collapse.
Unless trade tensions ease or economic indicators improve, oil markets may continue their downward spiral. Both policy decisions and geopolitics shape the volatile landscape ahead.
“When elephants fight, it is the grass that suffers.” — African Proverb
