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Tariffs and Recession Fears Dominate Crude Oil Market Fundamentals
Crude oil prices came under renewed pressure this week as escalating trade disputes and growing concerns over demand destruction dominated the market narrative. U.S.-China trade tensions intensified with reciprocal tariff hikes—145% from Washington and 125% from Beijing—deepening fears of a global economic slowdown. This deterioration in macro sentiment has dragged oil benchmarks lower for the second consecutive week, reversing earlier gains and fueling a risk-off tone across commodities.
Last week, Light Crude Oil Futures settled at $61.50, down $0.49 or -0.79%.
The impact of these tariffs is being felt across the oil complex. The Energy Information Administration and several investment banks revised down global demand growth forecasts, warning that oil consumption could fall by up to 1% if global GDP slips below 3%. Rystad Energy highlighted that Chinese demand, previously expected to grow by up to 100,000 barrels per day, is at risk of stagnating. Market participants are pricing in a prolonged downturn in industrial activity, particularly in Asia, where recent restocking may not repeat unless prices remain deeply discounted.
This week’s crude oil market action was driven by a deepening demand outlook and rising macroeconomic stress. Despite emerging supply risks and the potential for future tightening, the current balance of fundamentals remains weighted to the downside. Until trade tensions ease or meaningful supply reductions materialize, the oil price forecast remains bearish.
Technically, the tone of the market this week will be determined by trader reaction to the pivot at $63.70. However, the overall long-term trend is expected to remain down until buyers can overcome the 52-week moving average at $70.08. This suggests traders are likely to remain in “sell the rally” mode.
