OIL prices have dropped further as Donald Trump signalled he would push ahead with sweeping global tariffs, saying “you have to take medicine” as global stock markets continue to plummet.
With rising fears of a global recession, the price of barrels of crude oil have dropped by 15% over the past five days, with experts warning that the world’s economy is heading for a sudden slowdown.
Last week, the US president announced sweeping tariffs of at least 10% for the majority of countries, with rates going even higher for 60 countries deemed the “worst offenders”, during his “liberation day” announcement.
Following Trump’s announcement Opec, a coalition of leading oil-producing and oil-dependent countries, surprisingly announced they would increase output by 411,000 barrels per day in May.
However, head of geopolitical analysis at Rystad Energy Jorge Leon, has warned that the global economy is sharply slowing down.
“I think this is very serious.
“I don’t think we are in a 2008 world yet, but definitely [expecting] a significant deceleration in the global economy this year.”
In a note on Sunday, Goldman Sachs, an American multinational investment bank, analysts cut their oil price forecast in the wake of economists’ predicting a “stagnating” US economy and higher risk of recession.
“The risks to our reduced oil price forecast remain to the downside, because recession risk has grown further and because Opec+ supply may rise more than we assume,” they added.
“Our economists have also raised the 12-month US recession probability from 35% to 45% and have indicated they will change their forecast to a recession if the White House does implement most of the April 9 tariffs.”
American investment bank Morgan Stanley noted on Monday a 12.5% decline in Brent crude between the end of Wednesday and the end of Friday last week, which has only happened 24 times before, 22 of which it said were associated with recessions.
Shares in the major UK-listed oil producers also fell on Monday morning.
Speaking to reporters aboard Air Force One, Trump said he did not want global markets to fall, but also that he was not concerned about the massive sell-off either, adding: “Sometimes you have to take medicine to fix something.”
“I spoke to a lot of leaders, European, Asian, from all over the world,” Trump said.
“They’re dying to make a deal. And I said, we’re not going to have deficits with your country. We’re not going to do that because to me, a deficit is a loss. We’re going to have surpluses or, at worst, going to be breaking even.”
The higher rates are set to be collected from Wednesday, ushering in a new era of economic uncertainty with no clear end in sight.
