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Oil prices dropped further on Monday as US President Donald Trump signalled he would push ahead with sweeping global tariffs despite plunging stock markets and rising fears of recession.
Brent crude fell 2.5 per cent to $63.94 a barrel by early afternoon in London — a four-year low and a drop of 15 per cent over the past five days — in an indicator of deepening worries that the global economy is heading for a sharp slowdown.
Trump’s “liberation day” announcement of tariffs last Wednesday was followed hours later by an unexpected move by the Opec+ coalition to boost oil output.
“I think this is very serious. I don’t think we are in a 2008 world yet, but definitely [expecting] a significant deceleration in the global economy this year,” said Jorge Leon, head of geopolitical analysis at Rystad Energy.
Some analysts said falling oil prices could make them too low for some of the higher cost producers in the US, getting in the way of Trump’s promise to boost domestic production, or what he has called “drill, baby, drill”.
However, the president appeared to welcome the fall in crude, having pledged to bring costs down for US consumers.
In a post on Truth Social on Monday, Trump wrote: “Oil prices are down, interest rates are down (the slow moving Fed should cut rates!), food prices are down, there is NO INFLATION, and the long time abused USA is bringing in Billions of Dollars a week from the abusing countries on Tariffs that are already in place.”
In a note on Sunday, Goldman Sachs analysts cut their oil price forecast in the wake of economists predicting a “stagnating” US economy and higher risk of recession. They now expect Brent crude to trade at an average $58 a barrel in 2026 and West Texas Intermediate at $55 a barrel.
“The risks to our reduced oil price forecast remain to the downside, because recession risk has grown further and because Opec+ supply may rise more than we assume,” they added.
“Our economists have also raised the 12-month US recession probability from 35 per cent to 45 per cent and have indicated they will change their forecast to a recession if the White House does implement most of the April 9 tariffs.”
Morgan Stanley, in a note on Monday morning, said the 12.5 per cent decline in Brent crude between the end of Wednesday and the end of Friday last week had only happened 24 times before — 22 of which it said were associated with recessions.
It is lowering its base case forecast for oil demand for the second half of this year by about 550,000 barrels a day.
“We estimate that our previous Brent forecast of ‘high $60s’ in [the second half] of the year will no longer be achievable and change this to ‘low $60’,” it added.
In a warning for high cost producers, Ole Hansen, head of commodity strategy at Saxo, said: “Crude oil’s dramatic slump since last Wednesday . . . has taken prices to levels that may soon see supply being negatively impacted as high cost producers, especially in the US are forced to lower their production targets, thereby supporting a stabilisation.”
The decision by eight Opec+ members to bring forward plans to reverse production cuts means they will increase output by 411,000 b/d in May, up from a previous target of 122,000 b/d.
It followed tensions between members over differing degrees of adherence to the production cuts, with Kazakhstan consistently pumping above its quota.
Shares in the major UK-listed oil producers fell on Monday morning, with Shell dropping 7 per cent and BP falling 6 per cent, underperforming the wider market.
