Oil markets took a sharp hit as global prices dropped to their lowest levels in nearly four years, driven by mounting fears that intensifying trade disputes between major economies could significantly hinder global growth and dampen demand for crude.
During volatile trading sessions, oil benchmarks experienced steep declines. Brent crude futures fell by over 1.9% to settle around $64.34 per barrel, while U.S. West Texas Intermediate (WTI) dropped nearly 2%, closing at approximately $60.78 per barrel. These levels marked the lowest since April 2021 and extended the downturn that saw both contracts lose more than 11% in the previous week alone.
The sell-off was sparked by concerns that an escalating trade conflict between two of the world’s largest economies could trigger a global economic slowdown. The threat of additional tariffs and retaliatory measures has shaken investor confidence, impacting both energy and financial markets worldwide.
The situation worsened following reports that one side of the trade dispute was preparing to implement new tariffs unless the other rolled back its measures. This raised alarms among analysts and investors who feared a full-blown trade war could become inevitable. Statements from key officials further indicated that diplomatic efforts were being scaled back, with no new trade talks expected unless major concessions were made.
Financial institutions have reacted to these developments by slashing their economic forecasts. Some have raised their estimates for the likelihood of a U.S. recession, while also reducing oil price projections for the remainder of the year. The growing sense of uncertainty has also led to significant adjustments in the outlook for global crude demand.
Adding to the market pressure, top oil-exporting countries have begun to react. One major oil producer announced price cuts to its crude shipments to Asia, marking the lowest prices seen in four months. This move reflected concerns that weakening demand in key markets, especially in the face of trade restrictions, could leave supplies in surplus.
Meanwhile, a global oil alliance that includes both OPEC and non-OPEC members has increased its planned output for the coming month. Production is set to rise by over 400,000 barrels per day, significantly higher than previous targets. Member nations that exceeded output quotas have been asked to present plans to bring their production levels back into compliance.
Amid these developments, European policymakers are considering reciprocal trade measures to safeguard their own markets. Proposals for mutual tariff removals and countermeasures are being discussed in a bid to reduce tensions and restore stability to global trade.
With oil prices tumbling and economic indicators flashing warning signs, market observers are bracing for further volatility. The next few weeks are expected to be critical in determining whether global economies can navigate this turbulent period without slipping into a prolonged downturn.