LONDON (Reuters) — Oil slid around 3% on Monday to its weakest since 2021, while most commodity markets including metals and coffee declined as the intensifying trade war between the United States and China triggered worries over demand for raw materials.
Gold, which hit a record peak last week, also fell amid a wider market selloff.
Major stock indexes plunged as U.S. President Donald Trump showed no sign of backing away from his sweeping tariff plans, and Wall Street banks sounded the alarm on high recession probabilities.
“Commodities are on the receiving end of these tariff-related worries about growth and demand. As volatility continues to rise, we are going through a major deleveraging phase,” said Ole Hansen, head of commodity strategy at Saxo Bank. “Positions in commodities are being reduced across the board.”
Responding to Trump’s tariffs, China on Friday said it would impose additional levies of 34% on U.S. goods, confirming investor fears that a full-blown trade war is under way and that the global economy may be at risk of a recession.
Brent futures and U.S. West Texas Intermediate crude futures on Monday hit their lowest since April 2021. Over the past week, both benchmarks have lost more than 10%.
“Oil prices have fallen more sharply than equities since Trump unveiled tariff details in the middle of last week, with the decline exacerbated by OPEC+ plans of increased output,” said Satoru Yoshida, a commodity analyst at Rakuten Securities.
Goldman Sachs, Citi and Morgan Stanley revised their forecasts for oil prices down on Monday.
Natural gas prices also declined on recession fears, with the benchmark Dutch front-month contract down 1.45 euros to 35 euros per megawatt hour or $11.26 per million British thermal units, LSEG data showed. The contract earlier hit 33.65 euros/MWh in intra-day trading, its lowest level since September 2024.
COPPER, GOLD
Growth-dependent metals on the London Metal Exchange also fell.
Copper, used in power and construction, was last down 0.4% at $8,745 after dropping 6.3% on Friday, its biggest daily slide since the 2020 COVID pandemic. The early hours of Monday trading were volatile as financial markets in China, the top metals consumer, reopened after a public holiday on Friday. In this volatility, copper touched $8,105, a 17-month low, before trimming losses.
Among the precious metals, spot gold was last down 0.4% to $3,025 as some investors sold bullion to cover losses in other trades. Expectations of continuing central bank demand and bets on an early U.S. Federal Reserve interest rate cut limited the decline.
