Economist Peter Schiff says today’s cheaper crude is less a “drill‑baby‑drill” success than a warning light for a sputtering world economy.
What Happened: In an X post on Thursday, he argued oil is sinking because global trade is stalling and recession fears are throttling demand, not because producers suddenly flooded the market.
“A better slogan is ‘chill-baby-chill.’ It’s not more supply that is bringing down oil prices, but collapsing demand due to reduced trade and recession,” wrote Schiff.
West Texas Intermediate futures — tracked by the United States Oil Fund (NYSE:USO) — settled near $59.62 a barrel Friday, down from $72.63 on Jan. 20, the day Donald Trump began his second term — an 18 percent drop in a little over 100 days. Brent crude has slid about 16 percent in the same stretch. U.S. oil & gas stocks — as tracked by the Energy Select Sector SPDR Fund (NYSE:XLE) rose 0.37% on Thursday to $80.80.
WTI Crude Futures and Brent Crude Futures Chart Screenshots from Tradingeconomics.com
While falling prices ideally paint a positive picture from a demand perspective, supply tells a different story: U.S. drillers idled five rigs in mid‑April, the steepest weekly cut since 2023 and the lowest count since December 2021, according to Baker Hughes data. According to a separate Reuters report, analysts warn sub‑$60 prices threaten shale economics, curbing future output rather than expanding it — the opposite of the “drill‑baby‑drill” refrain.
The International Energy Agency last month cut its 2025 demand-growth call by 300,000 barrels a day, blaming “escalating trade tensions” that darken the economic outlook. The World Trade Organization echoes that worry, forecasting a 0.2 percent contraction in goods volumes this year, nearly three percentage points below trend.
Oil prices spiked Thursday after Donald Trump warned that any country buying Iranian oil or petrochemicals would face sweeping U.S. secondary sanctions. The threat rattled traders because it targets the bulk of Tehran’s crude exports.
Roughly 90 percent of Iran’s 1.8 million‑barrel‑per‑day March shipments went to China, ship‑tracking firm Vortex told Reuters. Much of that crude ends up in Shandong’s independent refineries, which often skirt global oversight—a fact that has irked Washington.
The State Department says China is “by far” Iran’s largest oil customer. If Beijing ignores Trump’s ultimatum, analysts fear a new sanctions clash could choke Iranian supply and send prices even higher.
Photo Courtesy: Maksim Safaniuk On Shutterstock.com
