Oil Prices Continue to Decline Amid Economic Concerns Over Trump’s Tariffs

Oil prices have seen a significant decline, dropping by more than 15% since President Trump announced plans to impose new tariffs on imports from various countries.

This fall in prices has left crude oil hovering near its lowest level in nearly four years, dipping below $60 per barrel. The economic implications of these tariffs are creating growing concerns over global economic growth, with many analysts fearing that the tariffs could lead to slower growth or even recessions in the US and other nations.

US oil prices continued their downward trajectory on Monday, shedding over 2%, further intensifying fears of an economic slowdown. While cheaper oil can be beneficial for consumers, as it reduces the cost of gasoline, diesel, and jet fuel, the sustained drop in prices poses challenges for US oil and gas companies. Lower oil prices typically result in reduced revenue for these companies, leading to potential cuts in drilling activities, decreased spending, and possible layoffs—especially in oil-rich states like Texas and New Mexico.

An additional factor contributing to the price drop is the decision by OPEC+ to increase oil production ahead of schedule. This move comes at a time when many experts are predicting a decrease in global demand for oil. With the increased supply and weakening demand, oil prices are facing further downward pressure.

The impact of Trump’s tariffs is also being felt by smaller oil companies, which are especially vulnerable to higher costs for materials such as steel tubing. The 25% tariff on steel, announced by the president in February, has further strained the financial situation of many producers. As a result, some of the smaller oil companies that have been loyal to the Trump administration could be forced to slow down operations or even shut down in the face of financial strain.

The global economic outlook has also been significantly altered in the wake of the tariff announcement. Saudi Arabia, a key player in the oil market, slashed the price of its key Arab Light crude oil to Asia, its primary market, by the most significant margin since 2022. This decision, combined with OPEC+’s output increase, has led to fears of further weakening demand and stronger supply, according to analysts.

As a result, oil-producing countries that rely on higher oil prices to balance their budgets are facing increased pressure. Saudi Arabia, for example, needs oil prices around $90 per barrel to meet its financial requirements. However, with Brent crude now trading below $63 per barrel, these countries are facing significant fiscal challenges.

Economists are now raising concerns about the potential for a global recession, with some analysts predicting a sharp slowdown in the global economy. Goldman Sachs has revised its oil price forecast downwards, now projecting that Brent crude will average $58 per barrel in 2026, with West Texas Intermediate (WTI) expected to trade around $55 per barrel. These downward revisions have been driven by growing recession risks and the possibility of an even larger-than-expected output increase from OPEC+.

Additionally, the likelihood of a global recession has led to an increased demand for bearish options on oil, signaling that traders are bracing for further price declines. Last week, the price of Brent crude saw a drop of more than 10%, and as the fears of a recession persist, analysts are adjusting their forecasts for oil demand in the second half of the year.

Bloomberg, the Financial Times, the New York Times contributed to this report.