Oil prices continued to fall on Friday, extending Thursday’s sharp drop. Brent crude, the international benchmark, traded at its lowest level in more than three years, below $65 a barrel, a fall of almost 8 percent.
Fears that President Trump’s tariffs could slash global economic growth — and demand for oil as a result — were weighing on the market, analysts said.
China’s announcement on Friday of 34 percent retaliatory tariffs against the United States has further stoked worries that demand for oil and other commodities could be throttled by the trade turmoil.
Thursday’s surprise decision by a Saudi Arabia-led group of countries in the OPEC Plus cartel to accelerate planned production increases has added to the downward pressure. Essentially, the market is worried about a bearish mixture of tariffs weakening demand, compounded by growing pressure from oil-producing countries like Iraq and Kazakhstan to add to supplies.
In a note to clients, analysts at Morgan Stanley said that in a recession — which is a looming possibility — demand growth for oil “typically falls at least to zero.”