Oil Extends Drop as Trump’s Trade War Hurts Outlook for Demand

(Bloomberg) -- Oil extended a drop as the global trade war hurt the outlook for demand, with data pointing to signs of strain in the US economy and China stepping up its pushback against the Trump administration’s tariffs.

Brent fell toward $65 a barrel, down for a second day, with West Texas Intermediate below $62. A widely-referenced gauge of US manufacturing weakened significantly, adding to signs of the drag from President Donald Trump’s levies. Other data due this week will shed further light on conditions.

China’s top diplomat, meanwhile, warned countries against caving in to US tariff threats, highlighting the intense global divisions. Foreign Minister Wang Yi said appeasement would only embolden the “bully” at a BRICS meeting, rallying the group of emerging-market nations to push back against US levies. 

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

Geopolitics also remain tp the fore, with talks between Washington and Tehran that have the potential over time to see curbs on Iranian oil loosened. Discussions over the Islamic Republic’s atomic activity are showing signs of progress, with Iran also pitching its sanctioned economy as an investment opportunity to the US.

“Weak economic data suggests downside risks for demand,” said ANZ Group Holdings analysts Brian Martin and Daniel Hynes in a note. The talks between Iran and the US are positive and do “lower the risk of an escalation that would trigger additional US sanctions,” they said.

While prices have dropped in April, underlying metrics indicate a still-tight market in the near-term. The spread between Brent’s two nearest contracts has been widening in backwardation ahead of expiry, with the June contract trading at a premium over the July one. The measure is around the strongest in nearly three months.

Elsewhere, most of Spain and all of Portugal were hit by the worst blackout in Europe in years, with several oil refineries in Spain forced to halt. Power is gradually being restored.

©2025 Bloomberg L.P.