Oil prices tumble over 3% amid escalating global trade war fears

Oil prices plunged more than 3% on Monday, extending a downward spiral triggered by mounting fears of a global trade war and its potential to stifle economic growth and curb energy demand worldwide.

Brent crude futures dropped by $2.10, or 3.2%, to $63.48 a barrel as of 10:27 GMT, while U.S. West Texas Intermediate (WTI) crude fell by $2.14, or 3.5%, to $59.85, according to data from Reuters.

The latest losses come on the heels of a dramatic 7% drop in both benchmarks last Friday—the steepest single-day decline in more than three years.

That sell-off followed China’s announcement of sweeping retaliatory tariffs on U.S. goods, escalating trade tensions after former U.S. President Donald Trump imposed new levies on Chinese imports.

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Analysts say the escalating trade dispute between the world’s two largest economies is rattling global markets and fuelling fears of a looming recession, which could sharply reduce global oil consumption.

“This confirms investor concerns that we may be entering a full-blown trade war, with far-reaching implications for economic stability and energy demand,” Reuters reported.

In a note to clients, investment bank JPMorgan revised its outlook for the global economy, raising the likelihood of a recession by the end of the year to 60%, up from a previous estimate of 40%.

The rising economic uncertainty has led to a wave of risk-off sentiment among investors, driving down commodity prices and reinforcing concerns that global oil demand may continue to weaken in the coming months.

Traders and market analysts are now closely monitoring further developments between the U.S. and China, as well as policy responses from central banks and major oil producers, as they brace for continued volatility in the energy market.