Oil Falls to Lowest in Six Months as Trade Wars Cloud Outlook

(Bloomberg) — Oil plunged to the lowest in about six months as US President Donald Trump’s trade wars hammer the outlook for demand just as OPEC signals it’s ready to start opening the taps on supply.

Brent crude plummeted 2.4% to settle just above $69, while West Texas Intermediate dropped 2.9% to settle near $66. Both closing prices were the lowest since early September. Global benchmark Brent at one point grazed the lowest level since December 2021 during the session, before paring losses.

Trump’s trade measures are threatening to reduce global energy demand and redraw oil flows, though just how they will play out depends on their final makeup and duration, both of which remain uncertain. On the supply side, OPEC nations are forging ahead with a scheduled production hike and US domestic stockpiles swelled last week, adding to expectations of a surplus.

Crude has trended lower since mid-January as Trump’s policies raised fears of multiple trade wars. Oil options traders are the most bearish in five months, and volumes of bearish put contracts surged Tuesday. 

EIA Data: Crude 3,614k Bbl, Median Est. 800k Bbl

The mounting gloom is leading many firms to revise price forecasts lower. Industry consultant Enverus downgraded its view for Brent to $70 a barrel for the year from $80 a barrel previously. Morgan Stanley cut its price forecast by $5 to $70 a barrel for the second quarter of 2025. Citigroup sees Brent sliding to $60 a barrel.

“The market is repricing the downside risk in crude, shifting from a $65 floor in WTI to closer to $60,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “At this point, the focus has completely shifted from supply risks to demand concerns, which could signal we’re approaching a bottom.”

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–With assistance from Jacob Wendler.

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