Oil Plummets as Trade Risks Increase and Saudis Slash Prices

(Bloomberg) -- Oil tanked for a third straight day after Saudi Arabia slashed its flagship crude price by the most in more than two years, and the escalating trade war spurred concerns about a global recession and weaker demand. 

Brent fell by almost 4% to $63.01 a barrel, a four-year low, before paring losses, while West Texas Intermediate was near $60. Saudi Aramco lowered Arab Light crude to the biggest buyers in Asia more than expected for May, moving just days after OPEC+ announced a surprisingly large output hike.

“Markets are beginning the week still in the throes of panic,” said Vandana Hari, founder of Vanda Insights in Singapore. “No one dares pick a bottom” and “stand in the way of the selling tsunami,” she said.

Market metrics signal conditions are loosening. The spread between Brent for this December and the same month in 2026 flipped to contango briefly, with the nearer contract below the longer-dated one. That’s a bearish structure.

Oil — along with other industrial and agricultural commodities, as well as equities — has been driven sharply lower as the wave of US tariffs, plus retaliation from China, torpedoed appetite for risk. Crude’s losses were exacerbated by the surprise move by the OPEC+ alliance to increase production by more than had been expected. The combination of risks to crude demand, coupled with additional output, has revived concerns about a global surplus.

Reflecting the fast-souring mood, Goldman Sachs Group Inc. reduced its price forecasts for the second time in less than a week. The revised outlook has Brent for December at $62 a barrel, down $4 from the prior view.

The revision incorporates the bank’s GDP downgrades, “including the forecast of a stagnating US economy,” analysts including Daan Struyven said in a note. The risks “remain to the downside, because recession risk has grown further and because OPEC+ supply may rise more than we assume,” they said.

US President Donald Trump had pressed the OPEC+ alliance “to cut the price of oil,” which he says is needed to reduce inflation and heighten pressure on Russia to help end the war in Ukraine. As markets came under pressure, Trump dismissed investors’ fears of recession, and offered no apologies for the turmoil. 

Among products, gasoline futures fell by almost 3% in New York, hitting the lowest level since February.

“It’s going to remain downhill by default for all risk assets until Trump says or signals something that prompts investors to pause and reassess their recession fears,” said Hari.

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