Oil prices fell more than 1.5% on Monday, amid concerns that U.S. tariffs on its partners could cause economic headwinds and weaken oil demand in global markets.
Brent crude, the benchmark for two-thirds of the world’s oil, fell 1.63% to $66.85 a barrel at 9:23 a.m. UAE time on Monday. West Texas Intermediate, which tracks U.S. crude, fell 1.7% to $63.58 a barrel.
US President Donald Trump announced comprehensive tariffs on his trading partners, raising fears of a slowdown in the global economy and its impact on oil markets.
The International Monetary Fund forecast in January that the global economy will grow by 3.3% this year, with the US economy expected to grow by 2.7%.
However, the IMF is expected to cut its global economic growth forecast when it releases its World Economic Outlook on Tuesday..
IMF Managing Director Kristalina Georgieva said last week: “Our new growth forecast will include significant price cuts, but not a recession”.
Vandana Hari, CEO of Singapore’s Vanda Insights, told The National: “As the market refocuses on the economic impact of Trump’s tariffs, especially with the World Bank and IMF meetings taking place in Washington this week, I expect the deteriorating global growth outlook and slowing oil demand to return to the fore, which will negatively impact crude oil prices”.
Investors are also closely watching developments related to the U.S.-Iran talks.
Talks between Iran and the United States over Tehran’s nuclear program are gaining momentum, with it “now unlikely to be possible” following progress in Rome this week, according to mediators.
USOil prices fell in world markets
On the London Futures Exchange (ICE), Brent crude fell $0.92 to settle at $67.04 a barrel. Meanwhile, light crude on the New York Mercantile Exchange (NYMEX) fell $0.93, settling at $63.75 a barrel.
The second round of negotiations led by Iranian Foreign Minister Abbas Araqchi and US Middle East envoy Steve Whit off concluded with positive results in the Italian city over the weekend. The Amman-brokered talks lasted four hours, and officials described them as a “good meeting” that made progress.
Oman’s foreign minister, Bader Al Busaidi, said on Channel X: “These talks are gaining momentum, and now even what was unlikely is possible”.
Oman’s Foreign Ministry said the talks had resulted in an agreement to move forward towards the next phase of negotiations aimed at concluding a “fair, lasting and binding agreement”.
If a deal is reached between the two countries, it could ease some supply concerns if sanctions on Iran are eased.
Last week, the United States imposed new sanctions on Iran to curb its exports, including sanctions on a China-based teapot refinery — or small independent oil refinery.
“The conclusion by the two sides of two fruitful rounds of nuclear negotiations over the past two weeks is the biggest development in the Iranian arena, and at this stage it is a bit pessimistic,” said Ms Harry”.
“If tariff wars continue to escalate, it will usually lead to a decline in global trade, the global economy, and possibly demand for our energy resources,” said Elvira Nabiolina. So, there are risks in this regard.”
Oil prices rose more than 3 percent on Thursday, recording their first weekly gain in three weeks on hopes of a potential U.S.-European Union trade deal and new sanctions on Iran’s oil exports.
Russia cuts oil price forecast due to weak market
Russia’s Economy Ministry has lowered its forecast for oil prices this year in an update to its baseline scenario, reflecting the latest trends in global oil markets.
Under the new scenario, Brent crude will average $68 per barrel, down from $81.7 per barrel in the September 2024 scenario, Interfax reported today. The ministry also updated its forecast for oil prices for the next two years, expecting the average price of Brent crude to be $72 per barrel in 2026, down from $77, and to remain at $72 in 2027 as well, down from a previous forecast of $74.5 per barrel.
For Ural crude, Russia’s main export mix, the Economy Ministry expects an average price of $56 per barrel this year. That price would be lower than the price cap set by the Group of Seven aimed at limiting Russian oil revenues, meaning exporters could use Western insurers and tankers to ship oil — unless the Group of Seven decides to lower the ceiling, as some members of the group have previously suggested.
Referring to the oil price forecast for 2025, a ministry spokesperson told Interfax: “You can see that forecasters’ forecasts fluctuate between complete pessimism and complete optimism. “We think these are fairly conservative price forecasts, and in terms of the budget and the sovereign wealth fund, we also think they are natural and realistic expectations.”
Earlier this year, oil prices fell 24% below the level stipulated in the country’s federal budget for this year. This decline came as a result of Trump’s attack on tariffs, the continued perception of a surplus in the market, and the appreciation of the ruble. The prospect of peace in Ukraine, fueled by the Trump administration, has also contributed to the trajectory of oil prices over the past month.
