Oil prices dropped about 2% to a two-week low on Monday, driven by news of Chinese startup DeepSeek’s energy-efficient AI model, raising concerns over energy demand for data centers. Brent crude fell $1.42 (1.8%) to $77.08 per barrel, and U.S. West Texas Intermediate (WTI) dropped $1.49 (2.0%) to $73.17, marking their lowest closes since Jan. 9 and Jan. 2, respectively.
DeepSeek’s AI Assistant overtaking ChatGPT as the top-rated app in the U.S. App Store heightened investor skepticism about long-term energy demand forecasts, as the model’s efficiency challenges projections that AI will drive significant electricity consumption through 2030-2035. Adding to the bearish sentiment, weak manufacturing data from China, the world’s second-largest economy, underscored the need for more policy support to stabilize growth.
President Trump’s continued push for OPEC to lower oil prices and his threats of new tariffs further pressured crude. Trump emphasized that reduced oil prices could weaken Russia’s finances and help end the war in Ukraine, but OPEC+ delegates have maintained plans to increase output starting in April. Concerns about trade disruptions from potential tariffs on China, Canada, and Mexico have weighed heavily on market sentiment.
Additionally, over the weekend, the U.S. reversed plans to impose sanctions and tariffs on Colombia after reaching an agreement on deported migrants. Colombia, which sends about 41% of its seaborne crude exports to the U.S., will continue its oil shipments, contributing to Monday’s price declines. Combined with weaker-than-expected demand indicators, these factors signal a challenging outlook for oil markets.