Oil tumbles further as US-China trade conflict fuels recession fears

2 months ago 16

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Anna Hirtenstein

Updated Mon, Apr 7, 2025, 1:51 AM 2 min read

By Anna Hirtenstein

LONDON (Reuters) -Oil prices extended losses connected Monday, falling much than 3% arsenic escalating commercialized tensions betwixt the United States and China stoked fears of a recession that would trim request for crude portion OPEC+ readies a proviso increase.

The Brent and WTI benchmarks some dropped to their lowest since April 2021.

Brent futures (BZ=F) mislaid $2.23, oregon 3.4%, to $63.35 a tube by 0903 GMT and U.S. West Texas Intermediate crude futures (CL=F) were down $2.22, oregon 3.58%, astatine $59.77.

Oil plunged by 7% connected Friday arsenic China ramped up tariffs connected U.S. goods, escalating a commercialized warfare that has led investors to terms successful a higher probability of recession. Last week Brent and WTI mislaid 10.9% and 10.6% respectively.

"The uncertainty astir tariff policy; that's inactive precise present. You person a fig of Wall Street banks slashing economical prospects and calling retired overmuch greater probabilities of recession," said Harry Tchilinguirian astatine Onyx Capital Group. "That's truly what's driving sentiment."

Goldman Sachs connected Monday forecast a 45% accidental of recession successful the U.S. implicit the adjacent 12 months and made downward revisions to its lipid terms projections. JPMorgan said past week that it sees a 60% probability of recession successful the U.S. and globally.

Responding to U.S. President Donald Trump's tariffs, China said connected Friday that it would enforce further levies of 34% connected American goods, confirming capitalist fears that a full-blown planetary commercialized warfare has begun.

Imports of oil, state and refined products were fixed exemptions from Trump's sweeping caller tariffs, but the policies could stoke inflation, dilatory economical maturation and intensify commercialized disputes, weighing connected lipid prices.

Federal Reserve Chair Jerome Powell said connected Friday that Trump's caller tariffs are "larger than expected" and the economical fallout is apt to beryllium so, too.

Adding to the downward momentum, the OPEC+ radical comprising the Organization of the Petroleum Exporting Countries and its allies decided to beforehand plans for output increases. The radical present aims to instrumentality 411,000 barrels per time (bpd) to the marketplace successful May, up from the antecedently planned 135,000 bpd.

"This imaginable influx of supply, reversing cuts maintained implicit the past 2 years, represents a large displacement successful marketplace dynamics and acts arsenic a important headwind for prices," said Sugandha Sachdeva, laminitis of New Delhi-based probe steadfast SS WealthStreet.

At the play OPEC+ ministers emphasised the request for afloat compliance with lipid output targets and called for overproducers to taxable plans by April 15 to compensate for pumping excessively much.