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Oil prices remained largely flat on Friday, yet were poised to log a second consecutive weekly loss as investors weighed the economic toll of a rapidly escalating U.S.-China trade conflict. Persistent fears of weakening global demand, paired with downgraded forecasts from energy authorities, have kept a lid on any price recovery.
As of 08:27 GMT:
- Brent crude futures edged down 3 cents (0.05%) to $63.30 per barrel
- U.S. West Texas Intermediate (WTI) crude rose 2 cents (0.03%) to $60.09 per barrel
Both benchmarks have remained range-bound in recent sessions, consolidating steep losses from earlier in the month.
- Brent is on track for a 3.5% weekly drop, after falling 11% last week
- WTI is down 3% for the week
Brent briefly fell below $60 per barrel this week, its lowest level since February 2021, before recovering slightly.
Trade War Escalation Dampens Oil Outlook
Oil markets continue to be pressured by the worsening trade standoff between the world’s two largest economies:
- On Thursday, U.S. President Donald Trump raised tariffs on Chinese goods to 145%
- In retaliation, China announced Friday it would impose a 125% tariff on U.S. goods starting Saturday, up from a previously announced 84%
While Trump paused tariffs on dozens of other trading partners, the ongoing U.S.-China conflict remains a dominant risk to global trade flows and economic sentiment—factors closely tied to energy demand.
“A prolonged dispute between the world’s two biggest economies is likely to reduce global trade volumes and disrupt trading routes,” analysts noted. “This will weigh on global economic growth and reduce demand for oil.”
EIA Slashes Oil Demand and Growth Forecasts
Reflecting these growing concerns, the U.S. Energy Information Administration (EIA) on Thursday cut its global economic growth outlook and lowered oil demand forecasts for both 2024 and 2025.
The EIA cited tariffs and related trade uncertainty as key downside risks, cautioning that prolonged economic tension could lead to a more persistent decline in oil consumption, particularly in emerging markets.
China’s Growth Outlook Dims
Adding to bearish sentiment, a Reuters poll showed that China’s economic growth in 2025 is likely to slow from 2024 levels, with U.S. tariffs cited as a major headwind. As the world’s largest oil importer, any decline in Chinese demand poses a significant risk to global energy markets.
Outlook: Bearish Risks Still Dominate
With the U.S.-China tariff war intensifying, oil markets remain vulnerable to further downside. While the market found temporary support from technical levels and bargain buying, the broader macroeconomic backdrop remains fragile.
Unless there is progress in trade negotiations or a sharp rebound in demand signals, crude prices may struggle to stage a meaningful recovery in the near term. All eyes now turn to further geopolitical developments and OPEC+ responses, as well as next week’s macroeconomic indicators.
