TOKYO (Reuters) – Oil prices fell more than 3% on Monday, extending last week’s losses as escalating trade tensions between the United States and China stoked concerns that a recession would reduce demand for crude.
Brent crude futures fell $2.28, or 3.5%, to $63.30 a barrel by 0049 GMT, while U.S. West Texas Intermediate crude futures fell $2.20, or 3.6%, to $59.79 a barrel. At their session lows, both benchmarks hit their lowest levels since April 2021.
Oil prices plunged 7% on Friday as investors saw a higher chance of a recession as the trade war escalated with China raising tariffs on U.S. goods. Brent is down 10.9% and WTI is down 10.6% over the past week.
“The main reason for the price drop is the fear that tariffs will weaken the global economy,” said Satoru Yoshida, a commodity analyst at Rakuten Securities.
“In addition, OPEC+’s planned production increase also added to the selling pressure,” he said, adding that retaliatory tariffs from countries other than China will be a key factor to watch.
Yoshida predicted that if the stock market continues to fall, WTI prices could fall to $55 or even $50 a barrel.
In response to U.S. President Donald Trump’s tariff policy, China said on Friday it would impose a 34% tariff on U.S. goods, confirming investor concerns that a full-blown global trade war is unfolding and the global economy could face the risk of a recession.
Oil, gas and refined product imports are not affected by Trump’s massive new tariffs, but these policies could trigger inflation, slow economic growth and intensify trade disputes, putting pressure on oil prices.
Federal Reserve Chairman Jerome Powell said on Friday that Trump’s new tariffs were “more than expected” and that the economic impact could also include rising inflation and slower growth.
Over the weekend, top OPEC+ ministers stressed the need for full compliance with oil production targets and called on overproducing countries to submit plans by April 15 to make up for the overproduction.
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