Islamabad, April 07: Oil prices extended their steep decline on Monday, falling over 3% as fears of a global economic downturn intensified following fresh escalations in the U.S.-China trade conflict.
The continued market turmoil raised concerns that a prolonged trade war could dent global oil demand and tip major economies into recession.
Brent crude futures dropped $2.28, or 3.5%, to $63.30 a barrel by 0049 GMT, while U.S. West Texas Intermediate (WTI) crude fell $2.20, or 3.6%, to $59.79. Both benchmarks touched their lowest levels since April 2021 during the session.
China’s Response
This fresh plunge follows Friday’s dramatic 7% drop in oil prices, triggered by China’s announcement of steep new tariffs on American goods, a retaliatory measure in the ongoing trade standoff with Washington.
In the past week alone, Brent has shed 10.9%, and WTI has slumped 10.6%, underscoring the deepening impact of trade tensions on commodity markets.
“The main driver of the decline is fear that the global economy will slow down as a result of these trade policies,” explained Satoru Yoshida, a commodity analyst at Rakuten Securities. “The planned output increase by OPEC+ is also creating additional downward pressure on prices.”
Yoshida warned that if the current sell-off in global stock markets continues, WTI prices could slide further—potentially to $55 or even as low as $50 per barrel.
The recent escalation came after U.S. President Donald Trump moved forward with more tariffs, prompting China to retaliate with a new round of levies, including a 34% increase on a wide range of American exports.
Although oil and energy-related products were exempted from these measures, analysts remain concerned about the broader economic impact.
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Even with exemptions for crude oil, natural gas, and refined fuels, the policy environment could stoke inflationary pressures, slow down business investment, and deepen global economic uncertainty—all negative signals for oil demand.
Federal Reserve Chair Jerome Powell weighed in on Friday, acknowledging that the scope of the tariffs was “larger than expected” and warning that the economic consequences—including elevated inflation and subdued growth—were likely to be significant.
OPEC Ministers
Meanwhile, over the weekend, ministers from OPEC and allied producers, known collectively as OPEC+, reiterated the importance of compliance with production quotas.
They urged member countries that had exceeded their production limits to submit concrete plans by April 15 to compensate for the excess output.
Market observers now face a complicated outlook: oil prices are being pulled lower by weakening demand expectations due to trade conflict, while supply-side uncertainties from OPEC+ continue to loom.
Read More: Oil Prices Crash to Lowest in 3.5 Years
If production increases go ahead as planned and global demand falters, the resulting oversupply could push prices down even further.
As the trade standoff shows no signs of abating and recession risk climbs, energy markets appear headed for continued volatility.
