LONDON: Oil prices extended losses on Monday, falling around 2 percent as escalating trade tensions between the US and China stoked fears of a recession that would reduce demand for oil, while OPEC+ readies a supply increase.

Brent futures were down $1.17, or 1.78 percent, to $64.41 per barrel at 4:03 p.m. Saudi time, and US West Texas Intermediate crude futures were down $1.17, or 1.89 percent, at $60.82.

The Brent and WTI benchmarks’ intra-day lows of $62.51 and $58.95 respectively were their lowest since April 2021.

Oil plunged by 7 percent on Friday as China ramped up tariffs on US goods, escalating a trade war that has led investors to price in a higher probability of recession. Last week, Brent and WTI lost 10.9 percent and 10.6 percent, respectively.

“The uncertainty around tariff policy — that’s still very present. You have a number of Wall Street banks slashing economic prospects and calling out much greater probabilities of recession,” said Harry Tchilinguirian at Onyx Capital Group, adding: “That’s really what’s driving sentiment.”

Goldman Sachs on Monday forecast a 45 percent chance of recession in the US over the next 12 months and made downward revisions to its oil price projections. Citi and Morgan Stanley also cut their Brent outlooks. JPMorgan said last week that it sees a 60 percent probability of recession in the US and globally.

Saudi Arabia on Sunday announced sharp cuts to crude oil prices for Asian buyers, dropping the price in May to the lowest level in four months.

“It’s a demonstration of the belief that tariffs will hurt oil demand,” said PVM analyst Tamas Varga. “It goes to show the Saudis, just like every man and his dog, expect the supply and demand balance to be affected and they are forced to cut their official selling prices.”

Responding to US President Donald Trump’s tariffs, China said on Friday that it would impose additional levies of 34 percent on American goods, confirming investor fears that a full-blown global trade war has begun.

Imports of oil, gas and refined products were given exemptions from Trump’s sweeping new tariffs, but the policies could stoke inflation, slow economic growth and intensify trade disputes, weighing on oil prices.

Adding to the downward momentum, the OPEC+ group — comprising the Organization of the Petroleum Exporting Countries and its allies — decided to advance plans for output increases. The group now aims to return 411,000 barrels per day to the market in May, up from the previously planned 135,000 bpd.

At the weekend, OPEC+ ministers emphasized the need for full compliance with oil output targets and called for over-producers to submit plans by April 15 to compensate for pumping too much.