Oil Price Rout Extends on Recession Fears
The price slump in crude oil that began last week has extended into this one as market players’ fears about a global recession deepen.
At the time of writing, Brent crude was trading at just below $64 per barrel, while West Texas Intermediate was changing hands for $60.54 per barrel, both down by over 2% from Friday’s close.
Last week, crude oil prices took a 7% dive after China announced retaliatory tariffs for U.S. imports, matching the U.S. rate of 34% on top of existing levies. The move was universally seen as bearish for crude oil, hence the effect on prices.
“The primary driver of the decline is concern that tariffs will weaken the global economy,” Rakuten Securities analyst Satoru Yoshida told Reuters. “Additionally, a planned production increase by OPEC+ is also contributing to the selling pressure,” Yoshida also said.
ING commodity analysts noted the OPEC+ decision on output as a major factor for recent oil price developments, attributing said decision to three reasons: one, U.S. sanction action against Venezuela and Iran; U.S. pressure on Saudi Arabia to lower oil prices; and a desire to punish overproducers such as Iraq and Kazakhstan.
The Dutch bank followed Goldman Sachs in revising its oil price for the year, now expecting Brent crude to average $72 per barrel in 2025, versus $74 per barrel earlier, ING’s head of commodity strategy Warren Patterson said in a note today.
“For now, our balance continues to show a modest deficit over 2Q25 and 3Q25, supporting our view that prices over this period should move modestly higher from current levels. However, this can change quickly, depending on OPEC+ policy and demand developments,” Patterson wrote.
Rakuten Securities’ Yoshida, on the other hand, predicts WTI could drop to as little as $50 per barrel if the stock market panic extends in time.
Goldman Sachs slashed its oil price forecast on Friday, now expecting Brent crude to average $69 per barrel in 2025 and WTI to average $66 per barrel.
By Irina Slav for Oilprice.com
