Oil prices extended losses on Monday, falling 3% as escalating trade tensions between the United States and China stoked fears of a recession that would reduce demand for crude while OPEC+ readies a supply increase.

The Brent and WTI benchmarks both dropped to their lowest since April 2021.

Brent futures lost $1.94, or 3%, to $63.64 a barrel by 1130 GMT and US West Texas Intermediate crude futures were down $1.94, or 3.1%, at $60.05.

Oil plunged by 7% on Friday as China ramped up tariffs on US goods, escalating a trade war that has led investors to price in a higher probability of recession. Last week Brent and WTI lost 10.9% and 10.6%, respectively.

"The uncertainty around tariff policy; that's still very present. You have a number of Wall Street banks slashing economic prospects and calling out much greater probabilities of recession," said Harry Tchilinguirian at Onyx Capital Group. "That's really what's driving sentiment."

Goldman Sachs on Monday forecast a 45% chance of recession in the US over the next 12 months and made downward revisions to its oil price projections. Citi also cut its Brent outlook and JPMorgan said last week that it sees a 60% probability of recession in the US and globally.

Saudi Arabia on Sunday 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."

Responding to US President Donald Trump's tariffs, China said on Friday that it would impose additional levies of 34% on American goods, confirming investor fears that a full-blown global trade war has begun.

Imports of oil, gas and refined products were given exemptions from Trump's sweeping new tariffs, but the policies could stoke inflation, slow economic growth and intensify trade disputes, weighing on oil prices.

Federal Reserve Chair Jerome Powell said on Friday that Trump's new tariffs are "larger than expected" and the economic fallout is likely to be so, too.

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

"This potential influx of supply, reversing cuts maintained over the past two years, represents a major shift in market dynamics and acts as a significant headwind for prices," said Sugandha Sachdeva, founder of New Delhi-based research firm SS WealthStreet.

At the weekend OPEC+ ministers emphasised the need for full compliance with oil output targets and called for overproducers to submit plans by April 15 to compensate for pumping too much.

Demand is already looking weaker, with crude imports softening in Asia in the first quarter, data compiled by LSEG Oil Research shows.