Oil prices continued their decline on Monday as U.S. President Donald Trump indicated plans to proceed with comprehensive global tariffs, despite slumping stock markets and growing recession concerns.
Brent crude decreased by 2.5% to $63.94 per barrel by early afternoon in London, marking a four-year low and a 15% decline over the previous five days. This reflects growing concerns about a potential sharp slowdown in the global economy.
Trump’s announcement of tariffs last Wednesday, termed as “liberation day,” was soon followed by an unexpected decision from the OPEC+ coalition to increase oil output.
Jorge Leon, head of geopolitical analysis at Rystad Energy, expressed the gravity of the situation, stating that while it is not akin to the 2008 economic environment, a significant deceleration in the global economy is expected this year.
Some analysts cautioned that declining oil prices could fall below sustainable levels for high-cost U.S. producers, potentially hindering Trump’s commitment to boost domestic production, a sentiment encapsulated in his phrase “drill, baby, drill.”
However, Trump appeared to welcome the reduction in crude prices due to his commitment to lower costs for U.S. consumers. In a post on Truth Social on Monday, he highlighted falling oil, interest, and food prices while asserting that the U.S. is benefitting economically from tariffs on other countries.
Goldman Sachs analysts, in a note on Sunday, downgraded their oil price forecast amid predictions of a “stagnating” U.S. economy and an increased risk of recession. They anticipate Brent crude to average $58 per barrel in 2026 and West Texas Intermediate to average $55 per barrel.
The analysts noted that the risk to their reduced oil price forecast remains on the downside, citing heightened recession risks and potential increases in OPEC+ supply beyond expectations. They increased the 12-month U.S. recession probability from 35% to 45%, indicating they may revise their forecast to a recession if the White House implements most of the April 9 tariffs.
Morgan Stanley, in a note on Monday, observed the 12.5% decline in Brent crude from the end of Wednesday to the end of Friday last week, a phenomenon that has only occurred 24 times previously, 22 of which were associated with recessions. The firm lowered its base case forecast for oil demand in the second half of this year by about 550,000 barrels a day.
Morgan Stanley’s forecast for Brent crude prices for the second half of the year has been adjusted from the “high $60s” to the “low $60s.”
Ole Hansen, head of commodity strategy at Saxo, warned that the steep decline in crude oil prices since last Wednesday could soon impact supply negatively, particularly as high-cost producers in the U.S. may have to lower their production targets, potentially leading to price stabilization.
Eight OPEC+ members decided to bring forward plans to reverse production cuts, increasing their output by 411,000 barrels per day in May, compared to a previous target of 122,000 barrels per day. This decision followed tensions among members regarding varying levels of adherence to production cuts, with Kazakhstan consistently exceeding its quota.
Shares in major UK-listed oil producers fell on Monday morning, with Shell dropping 7% and BP declining 6%, underperforming the wider market.
