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Recession Risk Drives Bearish Oil Sentiment
Investor sentiment has turned firmly bearish as recession warnings multiply. Goldman Sachs now places a 45% chance on a U.S. recession over the next 12 months, while JPMorgan pegs the global and U.S. risk at 60%. This economic pessimism has triggered a broad re-evaluation of oil prices projections, with major banks downgrading their outlooks.
On top of that, Federal Reserve Chair Jerome Powell warned that Trump’s tariffs are “larger than expected,” with economic fallout likely to follow. Although oil and gas imports have been exempt from the new levies, traders are concerned that slower global growth and weaker industrial demand will still significantly dampen crude consumption.
Saudi Arabia and OPEC+ Respond to Weak Demand
In a clear signal of softening demand, Saudi Arabia slashed its official selling prices to Asian buyers to the lowest in four months. The move follows a notable decline in Asia’s Q1 crude imports, which averaged 26.44 million barrels per day (bpd)—down 640,000 bpd from the same period last year. While March showed a rebound to 27.39 million bpd, analysts attribute the gain largely to restocking and opportunistic buying as prices dropped.
Meanwhile, OPEC+ surprised markets by boosting its May supply increase to 411,000 bpd, up from the prior plan of 135,000 bpd. Ministers also reiterated their demand for compliance and compensation from overproducing members, but the move still signals a more aggressive return of barrels into an already fragile demand environment.
Price-Driven Buying Not Enough to Offset Demand Concerns
Even with Brent dipping as low as $63.01 in early Monday trading—a 16.5% fall from the April 2 peak—lower prices may not be enough to trigger sustainable buying from Asia. China’s March crude arrivals showed improvement, but the gains followed earlier inventory draws and likely won’t repeat unless prices remain subdued.
Bearish Oil Prices Forecast on Weak Demand and Trade Headwinds
The oil market is now driven by fears that trade conflicts will significantly drag down global growth and fuel demand. Despite cheaper crude and signs of restocking, the broader demand outlook remains weak. With recession risks rising and OPEC+ supply growing, the oil price forecast remains bearish in the near term.
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