Oil prices declined on Monday as renewed concerns over the escalating trade conflict between the United States and China weighed on market sentiment, fuelling fears of a global economic slowdown that could erode fuel demand.
By 2:45 pm AEST (4:45 am GMT), Brent crude futures slipped $0.16, or 0.3%, to US$64.60 per barrel, while U.S. West Texas Intermediate (WTI) crude futures fell $0.13, or 0.2%, to $60.77 per barrel.
Goldman Sachs revised its forecasts, predicting Brent crude will average US$63 and WTI US$59 for the rest of 2025. For 2026, the investment bank expects Brent to average US$58 and WTI US$55, reflecting long-term caution over demand outlooks.
Investor sentiment took a hit after Beijing raised tariffs on U.S. imports to 125% on Friday, in retaliation to President Donald Trump’s move to increase duties on Chinese goods.
Although Trump on Saturday granted tariff exclusions for smartphones, computers, and other consumer electronics — many of which are imported from China — U.S. Commerce Secretary Howard Lutnick stated on Sunday that critical technology products, including semiconductors, would still face additional duties within the next two months.
ANZ analysts observed: "Oil makes up around 33% of current global energy consumption, so it has a close correlation with world output. An economic downturn could see oil market balances soften significantly.
"This will be exacerbated by OPEC’s plans to accelerate planned output hikes, as it tries to pressure members to adhere to quotas."
Adding to the bearish sentiment, data from Baker Hughes showed that U.S. energy firms cut the number of oil rigs by the most in a single week since June 2023. The reduction marked the third consecutive weekly decline in total oil and natural gas rigs, indicating preparations for a potential slowdown in demand.
However, some geopolitical factors could lend support to prices. US Energy Secretary Chris Wright said on Friday that Washington could halt Iran’s oil exports as part of its broader strategy to exert pressure on Tehran regarding its nuclear ambitions.
