Oil Prices Dip Amid U.S. Credit Downgrade

Oil prices edged lower on Monday as investor sentiment took a hit following a credit rating downgrade for the United States and weaker-than-expected economic indicators from China. The cautious tone in the markets emerged despite last week’s optimism surrounding a temporary trade truce between the U.S. and China.

Brent crude futures slipped by 37 cents, or 0.57%, to $65.04 a barrel as of 7:00 WAT, while U.S. West Texas Intermediate (WTI) crude fell 26 cents, or 0.4%, to $62.23. The more actively traded July WTI contract was down 31 cents to $61.66 per barrel.

The slight pullback in oil prices follows a more than 1% rise last week, buoyed by the 90-day pause on tit-for-tat tariffs between Washington and Beijing. The temporary ceasefire in the trade dispute had sparked hopes for a revival in global trade and energy demand.

READ ALSO: Metaplanet Increases Bitcoin Holdings to 7,800 BTC

However, Moody’s decision on Friday to downgrade the U.S. sovereign credit rating has cast a new shadow over economic stability. Citing the country’s ballooning $36 trillion debt, the downgrade has intensified concerns around fiscal policy, especially as President Donald Trump pushes for another round of tax cuts.

In Asia, China—the world’s largest importer of crude oil—reported a slowdown in industrial output and retail sales growth in April. While the figures still outpaced economists’ forecasts, the overall deceleration adds to fears that the world’s second-largest economy may struggle to maintain momentum, even as Beijing steps up stimulus efforts.

READ ALSO: JD Vance Meets EU Leaders in Rome, Pledges to Boost US-Europe Trade Ties

Despite the easing of trade tensions last week, uncertainty remains high. The unpredictable nature of President Trump’s economic strategies and the persistence of elevated tariffs—some still as high as 30%—continue to cloud China’s export outlook.

Adding to the uncertainty is the unresolved status of nuclear negotiations between the United States and Iran. While the talks could have a significant impact on global oil supply, no concrete developments have emerged, helping to cushion oil’s decline.

As markets digest these overlapping geopolitical and economic signals, oil traders are likely to remain cautious in the short term. The global energy landscape now hangs in the balance, with further direction expected from upcoming data, political moves, and central bank signals.