Oil prices remained stable early on Wednesday, amid uncertainty stemming from changing U.S. trade policies. Market participants are closely evaluating the potential repercussions of the U.S.-China trade conflict on economic growth and energy demand.
Brent crude futures experienced a modest increase of 5 cents, or 0.1%, reaching $64.72 per barrel as of 0039 GMT. Meanwhile, U.S. West Texas Intermediate crude saw a slight uptick of 3 cents, also 0.1%, bringing it to $61.36. On Tuesday, both benchmarks experienced a decline of 0.3%.
The International Energy Agency reported on Tuesday that global oil demand is projected to increase at its slowest pace in five years by 2025. Additionally, U.S. production growth is anticipated to decline, influenced by tariffs imposed by U.S. President Donald Trump on trading partners and their subsequent retaliatory actions. The International Energy Agency has projected that global oil demand will increase by 730,000 barrels per day this year, a significant reduction from the 1.03 million barrels per day forecasted just a month ago. The recent reduction surpasses the cut implemented on Monday by the Organization of the Petroleum Exporting Countries.
“According to Tetsu Emori, CEO of Emori Fund Management, the International Energy Agency has indicated that demand growth is expected to be modest, and the ongoing imbalance between global crude oil supply and demand continues to exert pressure on the market.” “Should the stock market, which is presently facing challenges due to tariffs, experience a rebound, we may witness a surge in oil prices, potentially driving WTI above $65.” “However, in the absence of that support, it is anticipated that prices will remain in the low $60s,” he stated.
Concerns regarding the increasing tariffs imposed by Trump, alongside the heightened production levels from OPEC+, which includes OPEC and its allied producers like Russia, have contributed to a notable decline in oil prices, falling approximately 13% this month alone. In light of the ongoing trade tensions, major financial institutions such as UBS, BNP Paribas, and HSBC have revised their forecasts for crude prices downward.
Former President Trump has significantly increased tariffs on Chinese products, reaching unprecedented heights. In response, Beijing has imposed retaliatory tariffs on U.S. imports, escalating the trade conflict between the two largest economies in the world. This development has raised concerns among markets about the potential for a global recession. In a notable development reflecting escalating tensions, China has instructed its airlines to halt any further deliveries of Boeing jets. This action comes in response to the U.S. imposing a substantial 145% tariff on Chinese goods, as reported by Bloomberg News on Tuesday.
In a recent report, U.S. crude oil inventories experienced an increase of 2.4 million barrels for the week ending April 11. Conversely, gasoline stocks saw a decline of 3 million barrels, while distillate inventories decreased by 3.2 million barrels, according to sources referencing data from the American Petroleum Institute released on Tuesday.