Oil Prices Dip 2% as Recession Fears Heighten

Brent futures fell by $1.37 or 2.1 per cent to settle at $64.21 per barrel, while US West Texas Intermediate (WTI) crude futures tumbled by $1.29 or 2.1 per cent to sell at $60.70 per barrel.

The market had expected some ease after a widespread news report said President Trump was considering a 90-day pause on tariffs.

However, White House officials quickly denied the report, sending crude prices back into the red.

China, the world’s second-biggest economy behind the US, said it would impose additional levies of 34 per cent on American goods in retaliation for Trump’s latest tariffs.

Mr Trump responded that the US would impose an additional 50 per cent tariff on China if the country does not withdraw its retaliatory tariffs on his country.

The European Commission also proposed counter-tariffs of 25 per cent on a range of US goods on Monday in response to President Trump’s tariffs on steel and aluminum.

Market analysts noted that this confirmed that a trade war was in full swing and has made recession possible.

Goldman Sachs forecast a 45 per cent chance of recession in the US over the next 12 months, and made downward revisions to its oil price projections while JPMorgan said it sees a 60 per cent probability of recession in the US and globally. Citi and Morgan Stanley also cut their Brent outlooks.

Adding to the downward momentum, the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) decided to advance plans for output increases.

The group now aims to return 411,000 barrels per day to the market in May, up from the previously planned 135,000 barrels per day.

During the weekend, OPEC+ ministers emphasised the need for full compliance with oil output targets and called for over-producers to submit plans by April 15 to compensate for pumping too much.

Meanwhile, Saudi Arabia on Sunday announced sharp cuts to crude oil prices for Asian buyers, dropping the price in May to the lowest level in four months.