Oil prices fell more than $1 a barrel on Tuesday to their lowest level in four years as investors weighed the possibility of a recession due to the escalating trade war between the U.S. and China, the world’s two largest economies.
Brent crude futures were down $1.39, or 2.16%, at $62.82 a barrel. U.S. West Texas Intermediate crude futures were down $1.12, or 1.85%, at $59.58.
Both benchmarks have fallen 16% since U.S. President Donald Trump’s April 2 announcement of tariffs on all U.S. imports.
The U.S. will impose 104% tariffs on China starting at 12:01 a.m. EDT (0401 GMT) on Wednesday, a White House official said, adding another 50% to the tariffs after Beijing failed to lift its retaliatory tariffs on U.S. goods by a noon Tuesday deadline set by Trump.
Beijing vowed not to bow to what it called U.S. blackmail after Trump threatened an additional 50% tariff on Chinese goods if the country did not lift its 34% retaliatory tariffs.
China’s Commerce Ministry said the country would fight to the end, raising concerns about a global economic contraction.
Both oil benchmarks continued to fall in post-settlement trade. U.S. crude futures fell to $57.88, while U.S. stock indexes also broadly declined.
“The scenario has presented a case for a global recession, where concerns about a decline in energy demand have emerged,” Alex Hodes, director of market strategy at financial services firm StoneX, said in a note.
U.S. Trade Representative Jamieson Greer told U.S. senators on Tuesday that China has not indicated its willingness to work toward trade reciprocity.
Goldman Sachs forecasts Brent and WTI crude prices would be at $62 and $58 a barrel, respectively, in December 2025, and at $55 and $51, respectively, a year after that, in a different scenario.
The U.S. administration has indicated a strong preference for lowering crude prices to $50 or lower, considering this goal a top priority among its objectives, according to Natasha Kaneva, global head of commodity strategy at J.P. Morgan.
“That includes a willingness to endure a period of industry disruption similar to what the shale sector experienced during the 2014 price war between OPEC and shale, if it ultimately results in lower oil production costs,” Kaneva said.
IRAN TALKS
Trump also made a surprise announcement Monday that the U.S. and Iran would begin direct talks on Tehran’s nuclear program, but Iran’s foreign minister said the talks would not be in person.
U.S. Energy Secretary Chris Wright said Tuesday that Iran could face tougher sanctions if it does not reach a deal with Trump on its nuclear program.
“So of course, I would expect very tough sanctions on Iran, and hopefully push them to stop their nuclear program,” Wright said in an interview on CNBC.
Meanwhile, U.S. crude and distillate inventories fell while gasoline stocks rose last week, market sources said, citing figures from the American Petroleum Institute on Tuesday.
Crude stocks fell by 1.1 million barrels in the week to April 4, the sources said, speaking on condition of anonymity. Gasoline stocks rose by 210,000 barrels and distillate stocks fell by 1.8 million barrels, they said. Official weekly oil stock data from the Energy Information Administration is due on Wednesday.
Source: Investing.com
Oil Prices Fall $1 As U.S.-China Trade War Escalates
