Oil Prices Fall Over 1.5 Per Cent As Concerns Of A US Recession Mount Amid Tariff Tensions

Worries that these trade measures may weigh heavily on global growth, and in turn suppress fuel demand, led to a pullback in crude markets after recent gains.

Investor nerves were once again rattled Monday as the US dollar weakened and Asian stock markets dipped in response to ongoing trade tensions.

Source : Freepik

Oil prices dipped by over 1.5 per cent on Monday, as investors shifted focus back to the potential economic drag from the United States' aggressive tariff strategy. Worries that these trade measures may weigh heavily on global growth, and in turn suppress fuel demand, led to a pullback in crude markets after recent gains.

Brent crude futures slipped by 97 cents, or 1.4 per cent, to trade at $66.99 per barrel around 12 noon. US West Texas Intermediate (WTI) crude also declined, shedding 96 cents, or 1.5 per cent, to $63.72 a barrel, reported Reuters.

Both benchmarks  previously ended Thursday’s session higher, with Brent gaining 3.2 per cent and WTI up 3.54 per cent. Markets were closed on Friday in observance of the Good Friday holiday.

Tariffs And Supply Outlook Keep Market Cautious

Despite the recent upside, analysts remained wary. “The broader trend remains tilted to the downside, as investors may struggle to find conviction in an improving supply-demand outlook, especially amid the drag from tariffs on global growth and rising supplies from OPEC+,” said IG market strategist Yeap Jun Rong.

OPEC+—which comprises the Organisation of the Petroleum Exporting Countries and allies like Russia—plans to increase output by 411,000 barrels per day in May. However, this planned hike may be partially neutralised by reductions from members who have been producing above their assigned quotas.

Adding to the bearish mood, progress in US-Iran nuclear discussions also helped ease concerns about the tight oil supply. Iran’s foreign minister said both countries had agreed to begin drafting a framework for a possible nuclear deal, an outcome a US official described as showing “very good progress.” These negotiations come shortly after the US imposed new sanctions on a Chinese refinery accused of processing Iranian oil, putting additional pressure on Tehran.

Markets Monitor Economic Data For Direction

Despite a roughly 5 per cent rise in both Brent and WTI last week—their first weekly gain in three weeks—sentiment remained fragile. Much of the optimism had been driven by hopes for a US-EU trade deal and fears of tightening Iranian supply. But investor nerves were once again rattled Monday as the US dollar weakened and Asian stock markets dipped in response to ongoing trade tensions.

According to a Reuters poll conducted on April 17, the probability of a US recession within the next year is nearing 50 per cent, with the consensus being that tariff measures could trigger a marked economic slowdown. This concern is particularly significant given the US's position as the world's largest oil consumer.

Market participants are now looking ahead to key economic indicators due this week, including April’s flash manufacturing and services PMI data. “This week's series of PMI releases could further underscore the economic impact of tariffs, with both manufacturing and services conditions across major economies expected to soften,” said Yeap. He also noted that oil is likely to encounter resistance near the $70 per barrel mark.