Oil prices continued to fall on Friday and were set for a second weekly decline as concerns grew over an extended trade war between the United States and China, the world’s largest economies, which is expected to impact oil demand and slow economic growth.
As of 4:31 GMT, Brent futures were down 0.52 percent to $63 a barrel, while U.S. West Texas Intermediate crude futures lost 0.57 percent to $59.73. Brent is set to fall 4 percent this week, adding to an 11 percent drop last week, while WTI is set to decline 3.8 percent, after also falling 11 percent in the previous week.
Economic growth concerns growth
Prolonged trade tensions between the U.S. and China are likely to reduce global trade volumes and disrupt trade routes, eventually weighing on global economic growth. As the world’s two largest oil consumers, that will also impact crude consumption and place further pressure on prices.
The trade war between the two countries has escalated further after U.S. President Donald Trump raised tariffs against China to 145 percent on Thursday after announcing a pause on tariffs against dozens of trading partners on Wednesday. China, in turn, announced an additional import charge on U.S. goods, raising their tariffs to 84 percent on U.S. goods.
China is expected to ramp up its stimulus measures to offset the impact of Trump’s tariffs. However, softer-than-expected inflation data released on Thursday showed persistent pressure on the world’s second-largest economy.
Markets were also concerned about the economic impact on the U.S., given that the country still imports several Chinese goods that will be difficult to replace.
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EIA cuts global oil demand forecasts
The U.S. Energy Information Administration on Thursday lowered its global economic growth forecasts and warned that tariffs could weigh heavily on oil prices, as it slashed its U.S. and global oil demand forecasts for this year and next.
The EIA said it now expects global oil and fuel demand to grow by 900,000 barrels per day (bpd) from last year to around 103.6 million bpd this year. It previously expected growth of 1.2 million bpd this year. For next year, the EIA now expects demand growth of around 1 million bpd, down from its previous forecast of 1.2 million bpd.
Combined with weaker demand, an acceleration of the OPEC+ group’s plans to increase oil supply is set to raise global crude inventories starting mid-2025, the EIA said. That is sooner than the agency had previously anticipated, and oil markets will be in a wider surplus this year compared to earlier estimates, the EIA said.
The EIA now expects global benchmark Brent crude prices to average around $67.87 per barrel in 2025, a sharp decline from its previous forecast of $74.22. Next year, the agency expects Brent to average $61.48, down from its earlier expectation of $68.47. U.S. oil prices are now expected to average $63.88 per barrel in 2025 and $57.48 in 2026. That compares to prior forecasts of $70.68 for this year and $64.97 next year.
