Oil prices slid 2% to a nearly four-year low on April 7 on worries U.S. President Donald Trump's latest trade tariffs could push economies around the world into recession and reduce global demand for energy.

The session was marked by extreme volatility with intraday prices down more than $3/bbl overnight and up over $1 on the morning of April 7 on reports the White House called "fake news" that Trump was considering a 90-day pause on tariffs for all countries except China.

Brent futures fell $1.24, or 1.9%, to $64.34/bbl at 12:46 p.m. EDT (1646 GMT), while U.S. West Texas Intermediate crude futures fell $1.21, or 2%, to $60.78.

After crude prices fell about 11% last week, the April 7 losses put both benchmarks on track for their lowest closes since mid-April 2021.

Trump threatened to further increase tariffs on China on April 7, raising the possibility of escalation in a trade war that has already wiped trillions of dollars from global stock markets.

"We are expecting a strong correlation between oil and equities ... uncertainty surrounding the tariffs itself will be skewing odds in the direction of lower prices," analysts at energy advisory firm Ritterbusch and Associates said.

Goldman Sachs forecast a 45% chance of recession in the U.S. 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% probability of recession in the U.S. and globally.

Confirming investor fears that a full-blown global trade war has begun, China, the world's second-biggest economy behind the U.S., said on April 4 it would impose additional levies of 34% on American goods in retaliation for Trump's latest tariffs.

Trump responded that the U.S. would impose an additional 50% tariff on China if Beijing does not withdraw its retaliatory tariffs on the U.S., and said "all talks with China concerning their requested meetings with us will be terminated."

The European Commission, meanwhile, said on Monday it had offered a "zero-for-zero" tariff deal to avert a trade war with the U.S. as EU ministers agreed to prioritize negotiations, while striking back with targeted countermeasures next week.

There are growing worries that Trump administration policies will cause the price of goods to increase.

U.S. Federal Reserve Governor Adriana Kugler said some of the recent rise in goods and market-services inflation may be "anticipatory" of the effect of the Trump administration's policies, adding that it is a priority for the Fed to keep inflation in check.

The Fed and other central banks use higher interest rates to combat inflation. Higher interest rates, however, boost consumer borrowing costs and could cause economic growth and oil demand to decrease.

Supplier reaction 

Saudi Arabia on April 6 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."

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 bbl/d to the market in May, up from the previously planned 135,000 bbl/d.

During 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.

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