Crude oil prices retreated on Monday as renewed concerns over economic growth in the United States and China weighed on market sentiment. Brent crude fell 0.7% to $64.95 per barrel, while West Texas Intermediate (WTI) declined 0.4% to $62.23 per barrel by 09:43 GMT.
The decline came after Moody’s downgraded the U.S. sovereign credit rating, citing unsustainable fiscal policies and rising debt. Simultaneously, China’s April data showed slowing growth in both industrial output and retail sales—casting doubt on the demand trajectory from the world’s two largest oil consumers.
Despite gains of over 1% last week, the market reversed course amid macroeconomic caution. Giovanni Staunovo, analyst at UBS, noted that while the drop is modest, weak Chinese data has failed to provide the market with the support needed to extend last week’s gains.
Tariff Risks Add to Market Volatility
Oil markets also reacted to comments from U.S. Treasury Secretary Scott Bessent, who warned that tariffs could be reimposed on trade partners failing to negotiate “in good faith.” This statement reignited fears of a trade war resurgence, dampening risk appetite and adding further pressure on oil.
Analysts pointed to the combined effect of policy and economic signals:
- Moody’s downgraded U.S. credit from Aaa to Aa1
- Chinese industrial growth decelerated, though above expectations
- Retail sales in China missed forecasts, signaling soft consumer activity
- Potential U.S. tariff actions cloud global trade prospects
Ole Hansen of Saxo Bank summed up the situation: “Crude continues its volatile trend, with today’s move triggered by macro concerns rather than fundamentals.”
Geopolitical Uncertainty Limits Further Decline
While macroeconomic headwinds weighed heavily, ongoing geopolitical tensions provided a floor for oil prices. Traders closely monitored developments in Iran-U.S. nuclear negotiations, where uncertainty over an agreement continues to support oil’s underlying value.
U.S. special envoy Steve Witkoff stated that any deal must include Iran ceasing uranium enrichment—a stance quickly dismissed by Tehran. John Evans of PVM Oil noted that the talks are complex and may take months to resolve, prolonging uncertainty in supply forecasts.
Key support levels remain in place as long as diplomatic outcomes stay unresolved. In the near term, oil prices may continue to move sideways, driven by:
- Shifts in global economic sentiment
- Progress—or lack thereof—in nuclear negotiations
- Fluctuations in trade and fiscal policy from major economies
Oil’s price path remains clouded by external risks, leaving markets sensitive to every headline