Oil prices have dropped significantly due to rising fears of a global recession, triggered by intensifying trade tensions between the United States and China. Analysts warn that the economic slowdown is weakening oil demand and sending shockwaves through global markets. The collapse in prices is also delivering a direct blow to the Russian state budget, which relies heavily on oil revenues to finance its war against Ukraine.
As of early Tuesday, Brent crude oil futures fell by 44 cents or 0.7 percent to 65.42 US dollars (about £52.55) per barrel. West Texas Intermediate (WTI) dropped by 40 cents or 0.6 percent to 61.65 US dollars (roughly £49.50). Both benchmarks had already lost more than 1 US dollar (around £0.80) on Monday.
Market expert Priyanka Sachdeva from Phillip Nova said that “the lack of confidence in future demand and the absence of concrete signs of recovery in mainland China will continue to affect oil prices.” She highlighted that the world is watching the trade dispute closely as it threatens to drag the global economy into recession.
US President Donald Trump’s policy of imposing tariffs on all imported goods has provoked China into retaliating with its own levies, intensifying the trade war between the two largest oil-consuming countries. According to economists polled by Reuters, this clash has significantly increased the likelihood of a recession within the year.
Financial institutions have responded by lowering their expectations for oil prices. Barclays has cut its forecast for Brent crude in 2025 by 4 US dollars (around £3.20) to 70 US dollars (about £56.20) per barrel. The bank pointed to escalating trade tensions and the revised production strategy of OPEC+ as reasons for the downgrade. A surplus of around one million barrels per day is expected this year.
Adding further pressure, several members of the OPEC+ group, which includes Russia and its allies, are reportedly planning to boost output in June for the second consecutive month. Oil analyst Philip Verleger said that such a move “makes a significant drop in prices likely” and would deepen the oversupply.
The situation is particularly damaging for the Kremlin. Russia’s state budget is heavily dependent on energy exports, particularly oil. Low prices reduce Moscow’s ability to fund its ongoing war against Ukraine and undermine its economic stability. Despite the Kremlin’s attempts to project strength, a weakened oil market poses a serious threat to its war chest.
Ukraine continues to monitor these developments closely. The sharp decline in global oil prices exposes the fragility of Russia’s war economy and its reliance on fossil fuel exports to maintain military operations. The pressure on oil markets offers hope for increased international leverage against the aggressor state.
