Oil Extends Drop As Trump’s Trade War Pummels Outlook For Demand

Oil extended a decline as the global trade war hurt the outlook for demand, with data indicating strain in the US economy and China pushing back against the Trump administration’s tariffs.

Brent slipped below $65 a barrel, down for a second day, with West Texas Intermediate near $61. A widely referenced gauge of US manufacturing weakened significantly, another sign of the drag from President Donald Trump’s levies. Other data due this week will shed further light on trading conditions.

Brent is on track for the largest monthly loss since 2021, with prices battered by tit-for-tat tariffs between the US and its trading partners, as well as by OPEC+’s plans to revive production. While many countries are entering into trade negotiations with Washington, Beijing says it has so far declined to engage.

“It is becoming clear to the market that growth over recent months has primarily been driven by stockpiling and pre-tariff hoarding,” said Arne Lohmann Rasmussen, chief analyst at A/S Global Risk Management. “That effect is fading, which could lead to a sharp decline in US growth as consumption starts drawing down existing inventories instead of boosting production.”

Traders are also monitoring talks between Washington and Tehran that, over time, could potentially see curbs on Iranian oil loosened. Discussions about the Islamic Republic’s nuclear activity are showing signs of progress, with the country also pitching its sanctioned economy as an investment opportunity to the US.

Elsewhere, Spain and Portugal returned to some semblance of normality after suffering Europe’s worst blackout in years, which forced several oil refineries to halt. Power supplies have largely been restored and units at some processing plants are restarting.

Prices:

• Brent for June settlement fell 1.7% to $64.77 a barrel at 10:19 a.m. in London

• WTI for June delivery retreated 1.5% to $61.13 a barrel