Oil Prices Drop as Risk-Off Sentiment Shakes Markets

Oil prices have stabilized after a recent decline, mirroring the fluctuations in equity markets and risk assets as concerns mount that tariffs and other policies may impede growth in the world’s largest economy.

West Texas Intermediate was trading at around $66 per barrel after a 1.5% drop on Monday, while Brent crude remained near $69. On Monday, investors retreated from risk, driven by economic anxieties that arose in response to US President Donald Trump’s ongoing tariff policies and geopolitical instability, though the decline somewhat moderated on Tuesday.

Oil has fallen nearly 20% from its peak in mid-January, as Trump’s inconsistent approach to tariff hikes and attempts to reduce federal spending have clouded the economic outlook for the top oil-producing and consuming nation. Additional bearish factors include OPEC+ plans to boost supply and a decline in demand from China, where the government has instructed refineries to pivot away from producing core fuels like diesel and gasoline.

“Persistent external factors are driving down oil prices, with ongoing growth concerns creating a broader risk-off environment,” noted Warren Patterson, head of commodities strategy at ING Groep NV. “A significant slump in market sentiment complicates efforts to establish a price floor.”

US Energy Secretary Chris Wright offered a sliver of hope, indicating that the Trump administration was prepared to enforce US sanctions on Iranian oil production during the CERAWeek by S&P Global conference in Houston on Monday.

During the event, leaders from major oil and gas producers, including Chevron Corp, Shell Plc, and Saudi Aramco, expressed their strong support for President Trump’s energy dominance agenda. Vitol Group’s CEO Russell Hardy stated that an oil price range of $60 to $80 per barrel is a “reasonable” expectation for the years ahead.

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