Oil prices fell on Monday due to escalating worries that the ongoing trade war between the United States and China could hinder global economic growth and diminish fuel demand.
Brent crude futures were down 29 cents, or 0.45 percent, at $64.47 a barrel at 01:26 GMT. Meanwhile, U.S. West Texas Intermediate crude futures traded at $61.23 a barrel, down 27 cents, or 0.44 percent. Both contracts have experienced a decline of about $10 a barrel since the beginning of the month, as tensions between the world’s two largest economies have intensified.
Projections for oil prices
Goldman Sachs anticipates that Brent will average $63 and WTI will average $59 for the remainder of 2025. Furthermore, it projects Brent to average $58 and WTI $55 in 2026. The firm predicts that global oil demand in the fourth quarter of 2025 will rise by only 300,000 barrels per day year-on-year, “given the weak growth outlook,” according to a note by analysts led by Daan Struyven. This demand slowdown is expected to be particularly pronounced for petrochemical feedstocks.
Tariff increases and trade war escalation
In a significant move, Beijing raised its tariffs on U.S. imports to 125 percent on Friday, retaliating against President Donald Trump’s decision to impose higher duties on Chinese goods. This escalation in the trade war poses a threat to global supply chains. On Saturday, Trump approved exclusions from steep tariffs on smartphones, computers, and other electronics primarily imported from China. However, U.S. Commerce Secretary Howard Lutnick indicated on Sunday that critical technology products from China would face new duties within the next two months, alongside semiconductors.
Domestic price concerns in China
The trade war has intensified concerns that unsold exports could continue to drive domestic Chinese prices downward. “Inflation data from China were a window into an economy that is not in shape for a trade fight. Consumer prices fell for a second month in a row in year-on-year terms, while producer prices chalked up their 30th straight fall,” reported Moody’s Analytics in a weekly note, referencing data released on April 10.
U.S. energy firms adjust to demand outlook
As companies brace for a potential decline in demand, U.S. energy firms cut oil rigs last week by the most in a week since June 2023. This reduction lowered the total oil and natural gas rig count for a third consecutive week, according to a report by Reuters citing energy industry company Baker Hughes.
Read more: Oil prices dip to $63 per barrel as U.S.-China trade war raises demand concerns
Potential support for oil prices
In a development that could lend support to oil prices, U.S. Energy Secretary Chris Wright stated on Friday that the United States might halt Iran’s oil exports as part of Trump’s strategy to pressure Tehran regarding its nuclear program. Both countries engaged in positive and constructive talks in Oman on Saturday, agreeing to reconvene the following week to address Tehran’s escalating nuclear ambitions, as officials noted over the weekend.
