Oil prices rose more than 1% on Tuesday, recovering from a sharp recent decline driven by concerns that new U.S. tariffs could weaken global demand and trigger a broader economic slowdown.
Specifically, Brent crude climbed 81 cents, or 1.26%, to $65.02 per barrel, while West Texas Intermediate (WTI) crude rose 92 cents, or 1.52%, to $61.61 per barrel.
On Monday, oil prices had fallen nearly 2% amid fears over newly imposed tariffs by President Trump, which start at 10% and could rise as high as 50%, citing a need to revive U.S. industry. Several countries have requested exemptions, while China responded with reciprocal tariffs.
Analysts warn that continued escalation could push total U.S. tariffs on Chinese goods to as high as 104%, potentially worsening global market sentiment and increasing the risk of a recession.
A Reuters survey indicated that U.S. crude and distillate inventories likely rose by 1.6 million barrels, reflecting weak demand expectations. However, prices may find support around $60 per barrel — the estimated breakeven level for U.S. oil production.
Analysts believe persistent price pressure could slow down drilling activity and production growth, establishing a potential price floor for WTI in the $50 per barrel range.
Meanwhile, global stock markets also showed signs of recovery after three days of heavy volatility, with the ASX 200 index gaining 2.3%, recovering over half of the AU$112 billion lost earlier. Key stocks like CBA, BHP, and Macquarie Group posted notable gains. However, volatility remains high, and analysts caution that this rebound may be temporary due to ongoing trade tensions.
At the same time, oil prices dropped to a four-year low due to a combination of new trade tariffs and an unexpected production increase from the OPEC+ alliance. Brent crude fell below $63 per barrel — a 17% drop since President Trump’s tariff announcement on April 2, 2025.
Though prices briefly rebounded on rumors of a tariff pause, they slid again once the speculation proved unfounded. OPEC+, including key producers like Saudi Arabia, Russia, and Iraq, agreed to raise production by 411,000 barrels per day from May — significantly more than the expected 135,000 barrels.
Analysts at Morgan Stanley and Goldman Sachs cut their forecasts for both oil demand and prices, citing a slowing global and U.S. economy. Their updated projections show Brent averaging $62 per barrel in December and $58 per barrel in 2026.
This drop in oil prices could benefit U.K. consumers, potentially saving up to 6 pence per liter at the pump — with petrol and diesel prices expected to fall to their lowest levels since 2021.
In summary, oil prices are experiencing significant volatility due to the impact of new U.S. tariffs and rising output from OPEC+, along with growing fears of a global recession.
