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Oil prices fell sharply on Tuesday, pressured by mounting concerns that the prolonged U.S.-China trade conflict is severely dampening global demand expectations.
- At 11:19 GMT:
- Brent crude futures slid $1.22, or 1.85%, to $64.64 per barrel.
- U.S. West Texas Intermediate (WTI) crude futures dropped $1.10, or 1.8%, to $60.95 per barrel.
This marks the second consecutive day of losses for both benchmarks, taking them to their lowest levels in nearly two weeks.
Trade War Threatens Global Growth
The continued escalation of the U.S.-China trade war remains a critical drag on energy markets:
- A majority of economists polled by Reuters now predict that global recession risks have increased substantially due to President Donald Trump’s aggressive tariff policies.
- China, targeted by the steepest U.S. tariffs, has responded with heavy retaliatory duties, exacerbating fears over slower global trade and reduced oil consumption by the world’s two largest economies.
Analysts Slash Oil Demand and Price Forecasts
- Barclays on Monday cut its 2025 Brent crude forecast by $4 to $70 per barrel.
- The bank cited:
- Elevated trade tensions.
- A pivot by OPEC+ toward raising production, creating an estimated 1 million barrels per day supply surplus this year.
OPEC+ to Push for Further Output Increases
Sources told Reuters that several OPEC+ members are set to propose another acceleration of oil output hikes at the group’s next meeting in June, following the surprise production increase in May.
This potential rise in supply comes at a time when demand expectations are weakening, heightening concerns that the oil market could tip back into significant oversupply.
Kazakhstan Oil Exports Rise
Adding further weight to oversupply worries:
- Kazakhstan increased oil exports by 7% year-on-year to 19.52 million metric tons (approximately 1.63 million barrels per day) during the January–March period.
- The rise was driven by boosted flows via the Caspian pipeline, according to Reuters calculations based on official data and sources.
Outlook
The oil market faces a challenging outlook:
- Persistent trade tensions are capping optimism for a demand recovery.
- Potential increases in OPEC+ supply are adding downside pressure on prices.
- Analysts will closely watch upcoming U.S. inventory reports and global economic indicators this week to gauge the next moves for oil.
