Crude oil futures slid in early trading on Tuesday, reflecting growing investor anxiety over a cooling global demand outlook. Concerns over the economic fallout from intensifying trade tensions between the United States and China—the world’s top two oil consumers— weighed heavily on market sentiment.
Around 6 AM, the Brent crude dropped 25 cents, or 0.4 per cent, bringing prices down to $65.61 per barrel. Similarly, US West Texas Intermediate (WTI) futures saw an 18 cent decline, or 0.3 per cent, to reach $61.87 per barrel. The losses come on the heels of a more pronounced slump on Monday, when both benchmarks slipped by more than $1, reported Reuters.
Trade Tensions Fuel Market Uncertainty
The ongoing trade dispute between Washington and Beijing remains a central factor dampening oil demand expectations. The administration of US President Donald Trump has introduced sweeping tariffs on imports, aiming to revamp global trade dynamics. However, this aggressive stance has fuelled fears of a potential global recession.
In a recent Reuters survey, a majority of economists projected that these protectionist policies could push the world economy into a downturn before year-end.
China, bearing the brunt of US tariffs, has countered with its own set of levies on American goods, intensifying the trade war. With the economic standoff showing no signs of resolution, analysts have revised their oil market forecasts. Many now anticipate subdued demand and further downward pressure on prices.
Reflecting these shifts, Barclays reduced its 2025 Brent crude forecast by $4 to $70 a barrel on Monday. The bank attributed its revision to heightened geopolitical frictions and changes in production policy among key oil exporters. It now projects a surplus of 1 million barrels per day in global oil supply for the year.
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OPEC+ Eyes Further Output Increases
Production levels are also drawing attention as OPEC and its allies, collectively known as OPEC+, adjust their strategies in response to market conditions. Citing sources, the news agency reported that the group may advocate for another round of output increases in June, marking a second consecutive month of potential production hikes.
“A substantial (oil) price decrease appears probable if exporting countries boost production,” oil analyst Philip Verleger commented in a research note, highlighting how supply-side decisions could further pressure prices.
In the United States, stockpile data offers another piece of the market puzzle. A preliminary Reuters survey suggested that US crude inventories likely rose by around 500,000 barrels during the week ending April 15. The American Petroleum Institute is set to release its weekly estimate on Tuesday, followed by the official report from the Energy Information Administration on Wednesday.
