NEW YORK: Oil prices fell about 2% to a two-week low on Tuesday as investors braced for OPEC+ to boost output and worried US President Donald Trump’s tariffs would hit the global economy and slow demand for the fuel. Brent crude futures fell by $1.61, or 2.4%, to settle at $64.25 per barrel.
US West Texas Intermediate (WTI) crude dropped by $1.63, or 2.6%, to settle at $60.42. Both benchmarks posted the lowest settlement since April 10.
Trump’s aggressive tariffs on imports into the US have made it probable the global economy will slip into recession this year, according to a majority of economists in a Reuters poll.
China, hit with the steepest tariffs, has responded with its own levies against US imports, stoking a trade war between the top two oil-consuming nations. Analysts have sharply lowered their oil demand and price forecasts. “Trade between China and the US has slowed to a semi-embargo type flow.
Every day that passes without some kind of deal with any of our significant trade partners brings us one day closer to a global demand destruction situation,” Bob Yawger, director of energy futures at Mizuho, said in a note. The US trade deficit in goods widened to a record high in March as businesses ramped up efforts to bring in merchandise ahead of Trump’s sweeping tariffs, suggesting trade was a large drag on economic growth in the first quarter.
The fallout from Trump’s trade war reverberated through the corporate world on Tuesday, as delivery giant UPS said it would cut 20,000 jobs to lower costs. Auto maker General Motors pulled its outlook and pushed its investor call to Thursday pending possible changes to trade policy.
Trump was set to soften the blow of his auto tariffs through an executive order mixing credits with relief from other levies on parts and materials, after automakers pressed their case with the administration. UK oil major BP reported a deeper-than-expected 48% drop in net profit to $1.4 billion on weaker refining and gas trading. The energy market awaits earnings from US oil majors Exxon Mobil and Chevron this week.
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