Oil prices declined sharply on Wednesday, with both Brent and WTI crude futures posting their largest monthly losses in over three years, as Saudi Arabia signaled it would prioritize market share over price support, and ongoing global trade tensions raised concerns about weakening fuel demand.
Brent crude fell $1.13, or 1.76%, to settle at $63.12 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped $2.21, or 3.66%, closing at $58.21—the lowest since March 2021. For the month, Brent declined by 15% and WTI by 18%, marking the biggest monthly losses since November 2021.
Saudi Arabia’s recent pivot toward boosting production and encouraging a larger OPEC+ output hike in May, rather than maintaining supply cuts, rattled markets. This move, viewed by analysts as a potential prelude to a production war, stoked fears of oversupply amid already fragile demand. Further acceleration in output is expected to be discussed at the OPEC+ meeting on May 5, with several members reportedly in favor.
Simultaneously, the U.S.-China trade war continued to erode demand forecasts. Tariffs imposed by President Trump on all U.S. imports earlier in the month—and retaliatory Chinese levies—have clouded the outlook for the global economy. Analysts warned that these developments could substantially curtail oil demand growth, especially as travel and industrial activity slow in response to rising costs and uncertainty.
Economic data reinforced bearish sentiment: the U.S. economy contracted in Q1 due to businesses front-loading imports ahead of tariffs, and consumer confidence dropped to a near five-year low in April. A Reuters poll suggested Trump’s trade policy has significantly increased the risk of a global recession this year.
However, U.S. crude stockpiles provided a minor bullish note. Inventories unexpectedly declined by 2.7 million barrels last week to 440.4 million barrels, counter to expectations for a 429,000-barrel increase, as exports and refinery activity picked up.
Overall, a combination of rising supply signals from OPEC+, weakening global economic indicators, and escalating trade tensions is fueling concerns of a prolonged oil market downturn.