Affected by the reciprocal tariffs between China and the U.S., the risk of a global economic recession has risen. This has led to decreased market expectations for crude oil demand. Additionally, with OPEC and its allies planning to boost production, international oil prices continued their recent downward trend, averaging a drop of over 3% on Monday, April 7.
Rakuten Securities’ commodity analyst Satoru Yoshida noted that fears about tariffs weakening the global economy are primarily driving down oil prices. Furthermore, OPEC+’s plans for increased production have intensified selling pressure.
OPEC+’s sudden decision to ramp up production contradicts their earlier stance on protecting the oil market (Reuters).
BMI states that traditionally OPEC+ has been cautious about increasing production; they preferred higher prices over rash supply increases. However, their latest move defies this principle as they decided to increase output amidst sharply falling prices due to strong market fundamentals and an optimistic outlook.
These eight countries emphasized their commitment to maintaining market stability while retaining rights to pause or reverse production increases if necessary.
BMI Research Report: Oil Prices Likely To Keep Falling
According to BMI’s research report since President Trump announced comprehensive tariff measures last Wednesday (the 2nd), Brent crude’s front-month contract value has lost nearly 12%. Further declines seem almost inevitable as investors weigh recession risks both in America and globally.
Further Reading:
- International Crude Oil Prices Have Fallen For Two Consecutive Years; Brent Down By 3% For The Entire Year Of 2024
- Citi: Oil Prices Must Drop To $53 Per Barrel To Hit Fed’s 2% Inflation Target
The report states: “We are evaluating how a global economic recession impacts oil demand and market sentiment. We will revise our price forecasts in upcoming weeks focusing mainly on recent actions by OPEC+, who have played a crucial role in supporting prices & promoting recovery over past decade.”
As of Monday at 5 p.m., U.S West Texas Intermediate (WTI) crude dropped $2.59 or 3.6%, settling at $59.40 per barrel (~SGD80). Brent crude futures fell $2.57 reaching $63.01 per barrel—a decline of about 3.92%. Both benchmarks hit their lowest levels since April ’21.
Analysts say OPEC+’s nearly decade-long output cut agreement faces pressure from strong non-OPEC supply growth & slowing global demand expectations—prompting potential relaxation this year allowing lower pricing balance & regaining share but risking volatility & weakened price control impacting revenue-dependent producers.
In past five trading days alone—Brent crude plunged over15%, overall crude down more than16%. After China—the largest importer—announced last Friday(4th) imposing34% tariffs on US goods—oil immediately crashed7%.
Satoru Yoshida predicts if stock markets keep falling—we could see oil dropping towards$55 or even$50 per barrel.
These eight countries emphasized their commitment to maintaining market stability and reserved the right to pause or reverse the production increase if necessary.
BMI Research Report: Oil Prices May Continue to Fall
According to a BMI research report, since U.S. President Trump announced comprehensive tariff measures last Wednesday (2nd), the value of Brent crude’s front-month contract has lost nearly 12%, and further declines seem almost inevitable as investors weigh the risks of a U.S. and global economic recession.
Further Reading
International Crude Oil Prices Decline for Two Consecutive Years; Brent Down 3% for Full Year 2024
Citi: Oil Prices Need to Drop to $53 per Barrel to Meet Fed’s 2% Inflation Target
The report stated: “We are assessing the impact of a global recession on oil demand and market sentiment and will revise our price forecasts in the coming weeks, mainly looking at the recent actions of the oil alliance, which has played a key role in supporting oil prices and promoting market recovery over the past decade.”
As of 5 p.m. Monday, West Texas Intermediate (WTI) crude fell $2.59 or 3.6% to $59.40 per barrel (approximately S$80.08). Brent crude futures fell $2.57 to $63.01 per barrel, down 3.92%. Both benchmarks hit their lowest points since April 2021.
According to analysis, the oil alliance’s production cut agreement has lasted nearly ten years, but with strong supply growth from non-alliance countries and slowing global demand expectations, the alliance has reason to relax production cut restrictions this year, allowing lower oil prices to balance the market and regain market share for the alliance. However, this would increase market volatility, weaken the alliance’s control over oil prices, and economically impact producer countries that rely on oil revenue.
Over the past five trading days, Brent crude prices have fallen more than 15%, and crude prices have dropped over 16%. Last Friday (4th), China, as the world’s largest oil importer, announced a 34% tariff on U.S. goods, causing oil prices to plummet by 7%.
Satoru Yoshida predicted that if stock markets continue to decline, it is not impossible for oil prices to fall to $55 or even $50 per barrel.
Claiming Market Stability: Unusual Move by Oil Alliance
“Does this indicate a shift in their strategic direction? If the protective mechanisms of the oil alliance are weakening, we may need to further lower our price forecasts for Brent crude.”
The report noted that markets were in panic at that time; once reciprocal tariffs are fully implemented, U.S. actual tariff levels will rise to about 23%, higher than during the Great Depression of 1930.
The report also mentioned that this round of production increases might be a temporary strategy aimed at alleviating current market turmoil; the oil alliance could change its mind at any time.
Riley Evans 
Boob