Oil prices fell in Asian trade on Tuesday, coming back in sight of an over three-year low amid growing concerns that a global economic slowdown and escalating trade war will dent demand. 

Crude prices were nursing steep losses over at least the past three weeks, as uncertainty over U.S. President Donald Trump’s tariff agenda grew after his flip-flopping on tariffs against Canada and Mexico. 

Trump’s imposition of 20% tariffs on China- the world’s biggest oil importer- also dented sentiment, as Beijing retaliated with its own measures. 

But the biggest weight on oil prices was growing fears of a U.S. economic slowdown, especially as Trump embarks on a major overhaul of trade practices and government policies. Trump in a recent interview declined to rule out the possibility of a recession.

Brent oil futures expiring in May fell 0.7% to $68.77 a barrel, while West Texas Intermediate crude futures fell 0.8% to $65.15 a barrel by 21:23 ET (01:23 GMT). 

US recession fears batter oil markets 

Fears of a U.S. economic slowdown grew in recent weeks, especially amid increased disruption from Trump’s agenda. The 47th U.S. President announced a host of measures to slash government spending, reduce federal workers, and hash out new trade agreements through increased tariffs. 

Trump on Sunday declined to rule out the possibility of a recession, stating that he expected his agenda to cause some near-term disruption. He repeated his threats that plans for higher trade tariffs will come through in early-April. 

Fears of a recession were also furthered by weak readings on retail spending and the labor market for the first two months of 2025. Markets fear that worsening growth in major economies, especially the U.S., will dent oil demand in the coming months, and could especially hurt prices if supply increases. 

U.S. inflation data due later in the week is set to provide more cues on the economy.

Weak inflation data from China, released over the weekend, also showed the country was still struggling to shore up local demand. Beijing’s promises of more stimulus support were met with muted enthusiasm in recent weeks. 

Increased supply bets weigh on oil 

Trump’s plans to bring down energy prices also weighed, after he signed orders to ramp up domestic production. He also called on the Organization of Petroleum Exporting Countries to increase output- a demand the cartel complied with last week. 

A mix of slowing demand and rising supplies stand to severely dent oil prices in the coming months.

Focus this week is on the OPEC’s monthly report, due on Wednesday, for more cues on demand forecasts and the cartel’s plans for production.