Slumping Oil Prices Reflect Intensifying Economic Worries

Oil prices continued to fall on Friday, extending a sharp drop that began the day before as fears grew that President Trump’s tariffs could slash global economic growth — and demand for oil.

Brent crude, the international benchmark, traded at its lowest level in more than three years, below $65 a barrel, a fall of almost 8 percent.

Prices began to slide on Thursday after Mr. Trump unleashed tariffs on America’s trading partners, starting with a base-line duty of 10 percent on countries around the world, and higher duties for others, including a 34 percent tariff on goods from China.

On Friday, China announced 34 percent retaliatory tariffs against the United States, which has further stoked worries that demand for oil and other commodities could be throttled by the trade turmoil. As the world’s largest oil importer, China’s actions are watched closely by oil traders.

Peter Navarro, a White House aide who has advised Mr. Trump on trade, has been talking about the economic benefits of oil falling even further, to $50 a barrel, saying that it would help keep inflation in check.

At around $62 a barrel in the United States, oil prices are approaching the level where it will not necessarily be profitable for companies to drill new wells, according to the Federal Reserve Bank of Dallas.

A surprise decision on Thursday by a Saudi Arabia-led group of countries in the OPEC Plus cartel to accelerate planned production increases pushed oil prices down further. Essentially, the market is worried about a bearish mixture of tariffs weakening demand, compounded by growing pressure from oil-producing countries like Iraq and Kazakhstan to add to supplies.

In a note to clients, analysts at Morgan Stanley said that in a recession — which is a looming possibility — demand growth for oil “typically falls at least to zero.”