Crude prices just dropped to their lowest level in four years amid the chaos of Trump’s trade war.
WTI crude traded below $60 a barrel on Monday, the lowest since 2021.
Traders are eyeing elevated recession risks and the prospect of more crude supply on the market.
Oil prices touched their lowest level since the pandemic on Monday, with growth fears hammering the outlook for energy demand at a time when global supply is set to increase.
Crude prices extended their selloff from last week to trade lower on Monday. Brent crude, the international benchmark, dropped as much as 5% from Friday’s close to trade as low as $62 a barrel.
West Texas Intermediate crude also dropped as much as 5%, trading as low as $59 a barrel. That’s the first time WTI oil has traded below $60 a barrel since 2021.
Shares of oil companies were also pummeled amid the broader stock sell-off. Exxon Mobil Corp was down nearly 2% in late afternoon trading, with shares down 13% since Trump announced the latest tariffs last week. Chevron stock moved nearly 2% lower late in the day, falling 15% since Trump’s “Liberation Day” announcement.
Shell stock was down almost 3% toward the end of Monday’s session, with shares down 14% since last Wednesday.
Oil prices have been under pressure partly due to fears that Trump’s tariffs could weaken the economy and raise the risk of a recession this year, hurting demand for energy commodities.
Goldman Sachs lifted its recession odds to 45% this week, citing tariffs as the main reason. JPMorgan also lifted its recession forecast last week to 60% on trade war angst.
Forecasts for more supply are compounding the pressure on crude prices. Oil prices dropped more than 7% last Thursday after OPEC+ said it would boost its crude production by 411,000 barrels a day next month.
“Crude oil has been in free-fall ever since President Trump unveiled fresh tariffs on US imports Wednesday evening,” David Morrison, a senior market analyst at Trade Nation, wrote in a note on Sunday, adding that the production boost from OPEC+ was a “double whammy.”
“But it’s now likely that crude establishes itself in a range with limited upside potential. Investors are positioning themselves for slower economic growth with demand falling against a backdrop of plentiful supply. On the other hand, this is exactly what President Trump wanted, with cheap and abundant energy available to power the reestablishment of manufacturing and industry back in the US,” he added.
