Oil prices slip on concerns over tariffs, slowdown fears
Oil prices fell for a second day on Tuesday, as concerns mounted over a potential US recession, the impact of tariffs on global growth and as OPEC+ sets its sight on ramping up supply.
Brent futures fell 6 cents, or 0.1%, to $69.22 a barrel at 0402 GMT, while US West Texas Intermediate crude futures lost 13 cents, or 0.2%, to $65.90 a barrel.
US President Donald Trump’s protectionist policies have roiled markets across the world, with Trump imposing and then delaying tariffs on his country’s biggest oil suppliers, Canada and Mexico, while also raising duties on Chinese goods. China and Canada have responded with tariffs of their own.
Over the weekend, Trump said a “period of transition” for the economy is likely but declined to predict whether the US could face a recession amid stock market concerns about his tariff actions
“Trump’s comments triggered a wave of selling as investors started pricing in the risk of weaker growth in demand,” Daniel Hynes, senior commodity strategist at ANZ said.
Stocks, which crude prices often follow, slumped on Monday, with all three major US indexes suffering sharp declines. The S&P 500 (.SPX), opens new tab had its biggest one-day drop since December 18 and the Nasdaq slid 4.0%, its biggest single-day percentage drop since September 2022.
US Commerce Secretary Howard Lutnick said on Sunday Trump would not let up pressure on tariffs on Mexico, Canada and China.
Read more: Oil prices gain for a second day as US sanctions on Iran raise supply concerns
On the supply front, Russia’s Deputy Prime Minister Alexander Novak said on Friday the OPEC+ group agreed to start increasing oil production from April, but could reverse the decision afterwards if there were market imbalances.
Despite the market noise, Brent at around $70 a barrel is quite a strong support and oil prices may look to stage a technical bounce at current levels, said Suvro Sarkar, energy sector team lead at DBS Bank, adding that the OPEC+ supply response will continue to remain flexible depending on market conditions.
“If oil prices fall below the $70 per barrel mark for an extended period, output hikes may be paused in our opinion. OPEC+ will also keep a careful eye on Trump’s Iran and Venezuela policies,” he said.
“The US has already taken back Chevron’s licence to operate in Venezuela and it remains to be seen whether Iran sanctions will be intensified. However, in the interim, worries about global growth amid policy uncertainties and trade wars will dominate.”
In the US, crude oil stockpiles were expected to have risen last week, while distillate and gasoline inventories likely fell, a preliminary Reuters poll showed on Monday.
The poll was conducted ahead of weekly reports from industry group the American Petroleum Institute, due at 4:30 p.m. EDT (2030 GMT) later on Tuesday, and the Energy Information Administration, the statistical arm of the U.S. Department of Energy, at 10:30 a.m. EDT (1430 GMT) on Wednesday.
