Oil prices fell by about 2% to a two-week low on Monday, driven by concerns over energy demand following the rise of Chinese startup DeepSeek’s low-cost AI model. Prior to this news, oil was already trading lower due to weak economic data from China and fears that proposed tariffs by U.S. President Donald Trump could further strain economic growth and energy consumption. Brent crude settled at $77.08 per barrel, while U.S. West Texas Intermediate (WTI) dropped to $73.17, marking their lowest levels since early January.

DeepSeek’s AI Assistant surpassing ChatGPT as the top-rated free app in Apple’s U.S. App Store raised doubts among investors who had bet on rising U.S. energy demand from AI-driven data centers. Analysts at Jefferies noted that DeepSeek’s reported efficiency could challenge existing projections, where AI-related demand accounts for roughly 75% of U.S. energy forecasts through 2030-2035. While it is too early to draw firm conclusions, the significant year-to-date rally in power companies now seems vulnerable, according to Jefferies.

Additional pressure on oil prices came from weaker-than-expected Chinese manufacturing data and President Trump's renewed calls for OPEC to lower oil prices to help end the Russia-Ukraine war. OPEC+ has not yet responded, but existing plans to increase output from April remain unchanged. Meanwhile, Trump's tariff threats have heightened fears of a trade war that could slow global economic growth and reduce oil demand. Over the weekend, a brief U.S. tariff threat on Colombia was reversed, allowing Colombian crude exports to the U.S. to continue, further contributing to downward pressure on oil prices.