Shares in BP PLC (LSE:BP.) and Shell PLC (LSE:SHEL, NYSE:SHEL) fell 8% on Monday, as the oil majors faced a double blow from collapsing crude prices and mounting fears of a global recession triggered by President Trump’s sweeping tariffs.
The fallout from Trump’s trade measures has spread well beyond stock markets, hitting the commodities sector with full force.
Brent crude, the global benchmark, fell nearly 4% a barrel (and a four-year low) after Saudi Arabia slashed prices for its flagship Arab Light crude. US oil benchmark West Texas Intermediate also dropped, trading below $60.
Saudi Aramco’s decision to cut prices by $2.30 a barrel for May deliveries to Asia followed an unexpected move by the OPEC+ alliance to increase production.
The timing could hardly be worse: Trump’s global tariffs, and retaliatory measures from countries like China, have raised the risk of a sharp slowdown in global growth, threatening oil demand.
For BP and Shell, which generate the bulk of their profits from oil and gas production, falling prices and weaker consumption represent a significant headwind.
Add in the broader market anxiety over trade tensions, and it’s little surprise investors are pulling back from the energy sector.