Oil & Gas

Oil prices plummet as trade war raises fears of recession

April 7, 2025, 7:29 AM

China announced that it would impose a 34% tariff on US imports from April 10

Brent crude at $63.30, WTI at $59.79
Aramco cuts Asia selling price
Beijing unveils tariff response

Oil prices continued to drop on Monday as fears of a global trade war intensified and major producers issued bearish signals.

Saudi Arabia cut its crude prices to Asia and Opec+ advanced plans to increase output.

Brent crude futures fell $2.28, or 3.5 percent, to $63.30 a barrel on Monday. US West Texas Intermediate (WTI) dropped $2.20, or 3.6 percent, to $59.79. The declines followed an 8 percent plunge on Friday.

Saudi Aramco lowered its May official selling price for Arab Light crude to Asia by $2.30, setting it at $1.20 per barrel above the Oman/Dubai average, according to Reuters. It marks the second consecutive monthly cut and the steepest reduction in more than two years.

The deepening trade dispute between the US and China remains the key driver of market sentiment.

“China’s aggressive countermove to US tariffs all but confirms we are heading towards a global trade war; a war that has no winners and which will hurt economic growth and demand for key commodities such as crude oil and refined products,” Ole Hansen, head of commodity strategy at Saxo Bank, told Reuters

In response to President Donald Trump’s tariffs, China said on Friday that it would impose an additional 34 percent levies on American goods from April 10.

Adding to the pressure, the Opec+ alliance said on Thursday it would accelerate planned supply increases. It is now targeting an additional 411,000 barrels per day in May – up from the previously scheduled 135,000 bpd.

Goldman Sachs has lowered its oil price forecasts in light of recent developments. The bank cut its 2025 average Brent forecast to $69 a barrel, from $73, and WTI to $66, from $69.

For 2026, it trimmed Brent by 8.8 percent to $62 a barrel and WTI by 4.8 percent to $59.

Although oil, gas and refined products remain exempt from US tariffs, analysts warn that broader economic fallout could slow global growth, potentially stoke inflation and weaken energy demand. Prices are now approaching their lowest levels since March 2021.

Saudi Arabia, the UAE and other Gulf economies – highly reliant on hydrocarbon revenues – are also exposed to the fallout from the tariff escalation. While direct energy exports may be shielded, the broader disruption could weigh on regional financial markets.