Oil prices have experienced a significant decline, with Brent crude dropping below $65 per barrel, marking its lowest point since April 2021. West Texas Intermediate (WTI) also fell to approximately $61 per barrel, reaching levels not seen since August 2021.
This sharp decrease is primarily attributed to escalating trade tensions between the United States and China. In retaliation to U.S. tariffs, China imposed new tariffs on American goods, intensifying fears of a global economic slowdown and reducing demand for oil.
Compounding the situation, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) announced an unexpected increase in oil production by 411,000 barrels per day starting next month. This move aims to punish member countries that have been exceeding production quotas but has also contributed to the downward pressure on oil prices.
The combined effect of heightened trade disputes and increased oil supply has led to significant market volatility, with investors concerned about the potential for a global recession. Major stock markets have experienced substantial losses, and the energy sector is facing heightened uncertainty as it navigates these complex challenges.
