Georgina McCartney reported that Brent crude futures and options contracts traded on ICE reached all-time high volumes due to concerns over a potential global trade war and anticipated increases in oil output by OPEC+. The market experienced heavy selling, causing oil prices to plummet to their lowest levels in four years. This significant decline, the most extensive in eighteen months, led to a record-breaking number of 4.067 million ICE Brent futures and options contracts being traded in a single day. This surpassed the previous record set during the onset of the COVID-19 pandemic, which had caused turmoil in energy markets and decreased oil demand.
US President Donald Trump's unexpected imposition of tariffs on several countries, particularly China, further shook the oil market. Additionally, the decision by OPEC+ to boost oil output escalated concerns, with the group planning to add 411,000 barrels per day in May compared to the previous plan of 135,000 bpd. Brent prices continued to fall, dropping to $62.52 a barrel amid Trump's threats of higher tariffs on China and warnings from leading banks about an increased risk of recession.
Brent crude is a key indicator for global oil prices, reflecting the overall health of the oil market. Market experts, like Alex Hodes from StoneX, noted that investors reacted to the tariff announcements and OPEC news by adopting a bearish stance. Prior to Trump's tariff announcement, market focus had been on factors like demand growth, low oil inventories, and the potential impact of sanctions on major oil-producing countries such as Russia, Iran, and Venezuela. The surge in net-long positions on Brent futures and options by money managers reflected positive sentiment in the market, with Brent futures reaching a one-month high.
UBS analyst Giovanni Staunovo pointed out that the attention had shifted towards concerns about a potential economic slowdown due to the trade war and its impact on oil demand growth in the upcoming months. Trump had previously threatened to impose secondary tariffs on buyers of Russian oil, based on Moscow's role in the conflict in Ukraine.