HG MARKETS:

West Texas Intermediate (WTI) crude oil prices recovered some of their losses during European trading hours on Monday, after hitting a low of $58.80 earlier in the day, the lowest level seen in four years. At the time of writing, the price remained down by 3%, hovering around $60.40.

Oil prices have been under significant selling pressure since the beginning of April, primarily driven by concerns over the global economic outlook. These concerns were triggered by the recent tariffs imposed by U.S. President Donald Trump on Wednesday. Trump enacted a sweeping set of tariffs, targeting nearly half of what U.S. trading partners charge on U.S. goods, alongside a universal 10% baseline import duty.

This environment has made the oil demand outlook more uncertain, as investors are concerned that increasing tariffs and potential retaliatory actions from other countries could lead to inflation. The rising tariffs may slow down global economic activity, which could, in turn, reduce oil consumption. As a result, market participants are increasingly anxious about the broader economic impact. The fear is that higher tariffs will stifle economic growth, leading to lower demand for oil. Investors are now factoring in the potential for a global slowdown, which could depress oil prices. The threat of inflation also looms, further weighing on the outlook. As nations respond with countermeasures, the global economy’s productivity could face significant headwinds. This has left oil markets in a state of heightened volatility and concern.

A significant factor weighing on oil prices was the imposition of tariffs on key Asian economies, especially China and India. The U.S. introduced a 54% duty on China, which included a 34% reciprocal tariff and a 20% levy due to fentanyl concerns. This move is especially troubling given that China is the world’s largest oil importer. Any disruption to China’s oil demand could have a major impact on global oil prices. The tariffs have raised concerns about reduced demand from one of the largest oil-consuming nations. The potential for diminished Chinese demand has led to increased market uncertainty. This situation is amplifying fears about the future direction of oil prices.

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