Market Analysis

Trade War Concerns Keep Oil Prices Subdued

Mellissa · 16 Apr18.3K Views

Image Credit: CNN

Oil prices were largely unchanged early on Wednesday as uncertainty surrounding shifting U.S. trade policies kept markets cautious, with traders assessing the impact of the U.S.-China trade war on economic growth and energy demand.

Brent crude futures gained 5 cents, or 0.1%, reaching $64.72 per barrel by 0039 GMT, while U.S. West Texas Intermediate crude increased by 3 cents, or 0.1%, to $61.36. Both benchmarks fell 0.3% on Tuesday.

The International Energy Agency (IEA) has revised global oil demand growth expectations for 2025, predicting the slowest rate in five years, partly due to President Donald Trump's tariffs and retaliatory actions from trade partners. Global oil demand is now forecasted to increase by 730,000 barrels per day, down from the previous estimate of 1.03 million bpd last month. This marks a larger reduction than the recent cut by OPEC.

As the IEA pointed out, the moderate demand growth and the imbalance between supply and demand are putting pressure on the market. Tetsu Emori, CEO of Emori Fund Management, noted that oil prices could rise above $65 if the stock market recovers, but without such support, prices are likely to stay in the low $60s.

Concerns about escalating tariffs, along with increased production from OPEC+ members, have already caused oil prices to drop by around 13% this month.

The ongoing trade tensions have led several banks, including UBS, BNP Paribas, and HSBC, to lower their crude price forecasts. The trade war between the U.S. and China has raised fears of a potential global recession, further weighing on the market.

In a notable escalation, China has reportedly ordered airlines to halt further deliveries of Boeing jets in response to the U.S. imposing 145% tariffs on Chinese goods.

Meanwhile, U.S. crude oil stocks increased by 2.4 million barrels in the week ending April 11, while gasoline inventories dropped by 3 million barrels and distillate stocks fell by 3.2 million barrels, according to data from the American Petroleum Institute.