Oil Prices Continue Losses to Lowest Level in Four Years

Oil continued its losses, trading at its lowest levels in four years as the trade war between the United States and China escalated.

Oil prices fell more than one dollar a barrel on Tuesday, trading at their lowest levels in four years, as economic recession fears caused by the trade dispute between the United States and China, the world's two largest economies, exacerbated the impact of the stock market recovery.

Brent crude futures fell by $1.47, or 2.29%, to $62.74 a barrel. U.S. West Texas Intermediate crude futures fell by $1.26, or 2.08%, to $59.44.

A White House official said the United States would impose 104% tariffs on China from 12:01 a.m. EST on Wednesday, after Beijing did not raise its retaliatory tariffs on U.S. goods by the deadline set by Trump on Tuesday afternoon. Both standard crudes fell by more than one dollar a barrel.

On Tuesday, Beijing vowed not to bow to what it called US “blackmail” after Trump threatened to impose 50% additional tariffs on Chinese goods if China did not raise its 34% retaliatory tariffs.

China's Commerce Ministry said the country would “fight to the end,” raising fears about a global economic downturn.

“This scenario has provided a justification for a global recession, where concerns have emerged of low energy demand,” said Alex Hods, director of market strategy at financial services firm StoneX, in a note.

U.S. Trade Representative Jimison Greer told U.S. senators on Tuesday that China had not indicated its desire to work towards reciprocity in trade.

Goldman Sachs predicted that Brent and West Texas Intermediate crude would price $62 and $58 a barrel respectively by December 2025, and $55 and $51 respectively a year later, under different scenarios. 

The US administration has indicated its strong preference for reducing crude oil prices to $50 or less, considering this goal a top priority among its objectives, according to Natasha Kaneva, head of global commodity strategy at JPMorgan.

This includes preparing to endure a period of turmoil in the industry similar to that experienced by the shale oil sector during the 2014 price war between OPEC and shale oil, if it ultimately leads to a lower cost of oil production," Kaneva added.