U.S. crude oil prices have fallen under $60 a barrel for the first time since April 2021. This drop is a result of increasing anxiety over future tariffs, which will be implemented starting this Thursday. JPMorgan analysts have raised the chances for a U.S. recession to 60%, up sharply from a prior estimate of 40%. They point to this sudden increase as evidence, directly linking it to the anticipated effect of the tariffs.
These potential tariffs have been the source of considerable consternation. They would not only threaten to shove the U.S. economy into a recession but trigger a tsunami that would devastate the global economy. According to JPMorgan, the tariff implementation could lead to a significant slowdown, heightening concerns among investors and affecting market performance.
On Sunday night, West Texas Intermediate (WTI) futures dropped over 3% to close at $59.74 per barrel. This decrease would be notable on its own, with WTI retracing 6% over the course of the last week—a rarity for oil which tends to march in one direction. The ambiguity related to the tariffs has added fuel to the fire of anxiety running rampant through industries, especially in energy markets.
According to a new analysis from JPMorgan, implementing these tariffs would significantly raise the odds of a recession. They project the odds will increase by another 20%. The bank cautioned that the economic impact could be dire. This lends further credence to the notion that we should expect both our domestic and international markets to be ready for a soft landing.
“The tariffs would likely push the U.S. and possibly global economy into recession this year.” – JPMorgan
The market’s reaction to these developments is a perfect demonstration of the increasing fear of the stability of our economy. Investors are becoming more concerned with how these tariffs will impact consumer spending and business investments. The implications go far beyond the oil sector. Stakeholders are on the verge of recalibrating their strategies, suggesting that a new economic playbook may be in order.
We all know that oil prices are extremely volatile and unpredictable. Tariff measures are still evolving, and analysts remain on guard as to how they will affect the U.S. and global economies at large. Only time will tell how these economic policies and decisions will steer market conditions in the future, but the next few weeks will be pivotal.