Crude oil prices experienced a sharp decline in trading on Tuesday, amid ongoing concerns about the impact of the global economic recession on oil demand. Fears increased with the escalating trade tensions between the United States and its allies, especially China and European Union countries, leading to additional pressure on oil markets.
Sharp Drop in Oil Futures Prices West Texas Intermediate crude contracts fell by 1.71%, bringing the price per barrel to $59.80, while Brent crude contracts dropped by 2.05% to register at $62.97 per barrel. This sharp decline reflects persistent fears of the trade war's impacts on the major global economies, which could result in a decrease in global oil demand this year.
Factors Behind Falling Prices: Trade War and the U.S. Economy Oil prices have been severely affected by concerns regarding the slowdown in global economic growth due to rising trade tensions. In this context, Morgan Stanley has lowered its U.S. GDP growth forecast for 2025 to just 0.8%, compared to previous predictions of 1.5%. These forecasts reflect signs of declining economic activity in the U.S. as a result of the trade war with its trading partners.
Furthermore, Goldman Sachs' downward revision of oil price forecasts added to market pressures, as the bank indicated that Brent and West Texas Intermediate crude could fall to $62 and $58 per barrel, respectively, by December 2025. The bank also noted that these forecasts depend on two assumptions: first, that the U.S. economy avoids a recession if tariffs are significantly reduced, and second, that supply increases from eight OPEC+ countries.
Other Energy Markets Also Affected The declines were not limited to oil but also extended to energy markets. Heating oil contracts saw a decrease of 0.55%, reaching $2.0578 per gallon, while gasoline contracts dropped by 1.21% to $1.9959 per gallon. Natural gas contracts also fell by 4.10%, with the price of one million British thermal units reaching $3.505.
