Oil prices have fallen over 3% on Monday, extending losses from the previous week, amid growing concerns of a global trade war that could slow the world economy and weaken oil demand.
Brent futures declined by $2.10, or 3.2%, to $63.48 a barrel at 10:27 GMT, while US West Texas Intermediate crude futures lost $2.14, or 3.5%, to $59.85.
Both benchmarks plunged 7% on Friday to settle at their lowest in over three years after China ramped up tariffs on US goods in retaliation for Donald Trump’s tariffs.
This move could further escalate the trade war, leading investors to price in a higher probability of recession.
China responded swiftly to Trump’s tariffs, announcing additional levies of 34% on American goods, confirming investor fears of a full-blown global trade war.
Investment bank JPMorgan now sees a 60% chance of a global economic recession by year-end, up from 40% previously, amid the escalating trade tensions.
The trade war has led to a decline in oil prices, with some analysts predicting further declines, potentially testing the $80 mark. Weakness in crude demand in China, the world’s second-largest crude consumer, is bearish for oil prices.