Oil prices fell for a second day in early trade on Tuesday on worries that U.S. tariffs on Canada, Mexico and China would slow economies around the world and hurt energy demand while OPEC+ ramps up its supply.

Brent futures fell 29 cents, or 0.42%, to $68.99 a barrel at 0016 GMT, while U.S. West Texas Intermediate crude futures lost 36 cents, or 0.55%, to $65.67 a barrel.

U.S. President Donald Trump’s protectionist policies have roiled markets across the world, with Trump imposing and then delaying tariffs on his country’s biggest oil suppliers, Canada and Mexico, while also raising duties on Chinese goods. China and Canada have responded with tariffs of their own.

Over the weekend, Trump said a “period of transition” for the economy is likely but declined to predict whether the U.S. could face a recession amid stock market concerns about his tariff actions

“Trump’s comments triggered a wave of selling as investors started pricing in the risk of weaker growth in demand,” Daniel Hynes, senior commodity strategist at ANZ said.

Stocks, which crude prices often follow, slumped on Monday, with all three major U.S. indexes suffering sharp declines. The S&P 500 (.SPX) had its biggest one-day drop since December 18 and the Nasdaq slid 4.0%, its biggest single-day percentage drop since September 2022.

U.S. Commerce Secretary Howard Lutnick said on Sunday Trump would not let up pressure on tariffs on Mexico, Canada and China.

On the supply front, Russia’s Deputy Prime Minister Alexander Novak said on Friday the OPEC+ group agreed to start increasing oil production from April, but could reverse the decision afterwards if there were market imbalances.

In the U.S., crude oil stockpiles were expected to have risen last week, while distillate and gasoline inventories likely fell, a preliminary Reuters poll showed on Monday.

The poll was conducted ahead of weekly reports from industry group the American Petroleum Institute, due at 4:30 p.m. EDT (2030 GMT) later on Tuesday, and the Energy Information Administration, the statistical arm of the U.S. Department of Energy, at 10:30 a.m. EDT (1430 GMT) on Wednesday.

The yen was investors’ safe harbour of choice on Tuesday and it traded near five-month highs as fears about a tariff-driven slowdown in U.S. growth have rattled U.S. stocks and the dollar.

The Nasdaq (.IXIC) fell 4% overnight and the S&P 500 (.SPX) slid 2.7% as equities caught up with a big rally in U.S. bonds, moving on the risk that U.S. economic growth slows down.

The yen touched a five-month peak of 146.625 per dollar and was last trading at 146.85.

Other moves in the currency market were more muted, but the lack of flight to the dollar – which has been sinking in recent weeks – was noteworthy, according to analysts.

The overnight drop in the risk-sensitive Australian dollar was a modest 0.4% and it last bought $0.6272. Sterling was holding on above its 200-day moving average at $1.2875 and the euro was steady just above $1.08.

There were falls in the Canadian dollar and Mexican peso – the economies whose exports are to bear the brunt of U.S. tariffs – but they were modest.

The Canadian dollar was last steady around C$1.44 per dollar and the peso was at 20.34 per dollar. China’s yuan was steady at 7.26 per dollar in early offshore trade on Tuesday.

“Historically, the dollar outperforms when we get a solid rise in volatility, but when the U.S. economy and U.S. equity market is the central point of concern, this is now limiting the attractiveness of the dollar,” said Chris Weston, head of research at broker Pepperstone in Melbourne.

The turmoil in equities seemed to be triggered by a Donald Trump Fox News interview, in which the president talked about a “period of transition” and declined to predict whether his tariffs on China, Canada and Mexico would result in a U.S. recession.

The dollar index , however, had already notched its largest weekly drop in more than two years last week as selling tracked a fall in U.S. bond yields and the euro leapt on German plans to reform a brake on borrowing.

“The market is unsure whether fading U.S. exceptionalism will continue to hurt the dollar or whether the dollar benefits from its safe-haven status,” said Bank of Singapore strategist Sim Moh Siong, noting any extension of selling in stock markets may lead safe-haven dollar buying to finally kick in.

The dollar index was mostly flat overnight as small rises against the Aussie and sterling were offset by losses on the yen and it settled at 103.89.

Germany’s Greens overnight vowed to block plans for a massive increase in state borrowing to revamp the military, but forwarded rival proposals in a bid for compromise and the euro handed back none of its massive gains from last week.

U.S. bonds, however, rallied, pushing down yields at a time when global yields are spiking.

In a week, the gap between 10-year U.S. and German yields has shrunk 33 basis points and the gap between U.S. and Japanese yields has shrunk 17 bps.

The federal government is likely to cut the petroleum prices in upcoming second fortnightly review for March 2025 amid downward trend in global market.

Sources said the petrol price is expected to drop by Rs13 to Rs15 per litre while the price of high speed diesel may go down by Rs11 per litre.

The Oil and Gas Regulatory Authority (Ogra) will send its recommendations to the Ministry of Finance for revising the petroleum prices. However, a final decision will be taken after consultation with Prime Minister Shehbaz Sharif.

Meanwhile, oil prices fell for a second day on Tuesday in international market, as concerns mounted over a potential US recession, the impact of tariffs on global growth and as OPEC+ sets its sight on ramping up supply.

Brent futures fell 6 cents, or 0.1%, to $69.22 a barrel at 0402 GMT, while U.S. West Texas Intermediate crude futures lost 13 cents, or 0.2%, to $65.90 a barrel.