Oil prices dropped for a second consecutive day on Tuesday, as mounting fears over a potential U.S. recession, the global economic impact of tariffs, and OPEC+’s plans to increase supply weighed on market sentiment.
At 0402 GMT, Brent futures decreased by 6 cents, or 0.1%, to $69.22 a barrel, while U.S. West Texas Intermediate (WTI) crude futures lost 13 cents, or 0.2%, to $65.90 a barrel.
The market was further rattled by U.S. President Donald Trump’s protectionist policies, which have caused turmoil in global markets. Trump’s tariff actions, including imposing and then delaying tariffs on major oil suppliers like Canada and Mexico, as well as raising duties on Chinese goods, have triggered retaliation from China and Canada. On Sunday, Trump suggested that the U.S. could be facing a “period of transition” but stopped short of predicting a recession, leading to market uncertainty.
Daniel Hynes, senior commodity strategist at ANZ, noted that Trump’s comments triggered a wave of selling, as investors began to price in the risk of weaker economic growth and, consequently, reduced demand for oil. Stock markets also responded negatively, with all three major U.S. indexes experiencing sharp declines. The S&P 500 saw its biggest one-day drop since December 18, while the Nasdaq dropped 4%, its largest single-day percentage decline since September 2022.
On the supply side, Russia’s Deputy Prime Minister Alexander Novak announced that the OPEC+ group had agreed to gradually increase oil production starting in April. However, the decision remains flexible, with the possibility of reversing the output hikes if market imbalances occur. Despite the downward pressure on prices, Suvro Sarkar, energy sector team lead at DBS Bank, pointed out that Brent crude’s support around $70 per barrel may prompt a technical rebound, although the OPEC+ response will continue to adapt to changing market conditions.
Sarkar further noted that if oil prices stay below the $70 mark for an extended period, OPEC+ might pause any further output hikes. The group will also remain vigilant regarding U.S. policies toward Iran and Venezuela, with particular attention on the ongoing sanctions and their potential impact on global oil supply.
In the U.S., a preliminary Reuters poll indicated that crude oil stockpiles were expected to have risen, while inventories of distillates and gasoline were likely to have declined. The results will be confirmed later today with the release of reports from the American Petroleum Institute and the U.S. Energy Information Administration, which are closely watched for signs of market tightness or oversupply.