Oil prices took a slight dip on Wednesday, as fluctuating U.S. tariff policies created uncertainty. Traders are weighing the potential ramifications of the U.S.-China trade war on economic growth and energy demand. Brent crude futures decreased by 18 cents, or 0.3 percent, settling at $64.49 per barrel by 03:15 GMT. Meanwhile, U.S. West Texas Intermediate crude fell by 16 cents, also down 0.3 percent, to $61.17. Both benchmarks had already declined by 0.3 percent on Tuesday.
Global oil demand growth slows
The International Energy Agency (IEA) has projected that global oil demand will grow at its slowest rate in five years in 2025. Additionally, the rise in U.S. production is expected to taper off due to President Donald Trump’s tariffs on trading partners and the subsequent retaliatory actions. “Investors continue to struggle in finding a catalyst to drive a more meaningful rebound, as global growth is widely expected to slow ahead with U.S. tariffs, which puts oil demand in jeopardy,” Reuters reported, citing Yeap Jun Rong, market strategist at IG.
Read more: Oil prices rise to $65 on U.S. tariff exemptions, China crude demand
Downward trend in oil prices
“The downward trend for oil prices remains intact, and we may expect initial optimism around tariff rollbacks to fade,” Yeap added. He noted that the underlying macro headwinds from upcoming economic data could bring markets back to a more sobering reality. According to the IEA, world oil demand this year is anticipated to rise by 730,000 barrels per day, a significant decline from the 1.03 million bpd predicted last month. This reduction surpasses a cut made recently by the Organization of the Petroleum Exporting Countries (OPEC).
Market reactions and future predictions
“As the IEA highlighted, demand growth will likely remain modest, and the imbalance between global crude oil supply and demand is weighing on the market,” Tetsu Emori, CEO of Emori Fund Management was quoted by Reuters. He added, “If the stock market—currently under pressure from tariffs—rebounds, we could see a rally in oil prices pushing WTI above $65. But without that support, prices will likely stay in the low $60s.”
Impact of tariffs
Concerns over Trump’s escalating tariffs, combined with rising output from OPEC+, which includes OPEC and its producing allies like Russia, have already dragged oil prices down approximately 13 percent this month. The uncertainty surrounding trade tensions has prompted several banks, including UBS, BNP Paribas, and HSBC, to lower their crude price forecasts. Trump has increased tariffs on Chinese goods to staggering levels, leading Beijing to impose retaliatory duties on U.S. imports in an intensifying trade war between the world’s two largest economies. Markets fear this conflict could lead to a global recession.
Rising tensions and market responses
In an additional sign of escalating tensions, China has reportedly ordered its airlines not to take further deliveries of Boeing jets in response to the U.S. decision to impose 145 percent tariffs on Chinese goods, according to Bloomberg News. Meanwhile, U.S. crude oil stocks rose by 2.4 million barrels in the week ending April 11, while gasoline inventories dropped by 3 million barrels and distillate stocks fell by 3.2 million barrels, according to market sources citing American Petroleum Institute figures.
China’s economic growth and trade tensions
Data from China, the world’s largest oil importer, showed that the economy grew more than anticipated in the first quarter of 2025. China’s GDP increased by 5.4 percent year-on-year in the three months leading up to March 3, surpassing the average forecast of 5.2 percent growth. Chinese industrial production surged by 7.7 percent in March, exceeding expectations as local producers front-loaded exports ahead of steep tariffs imposed by President Trump. Retail sales also rose by 5.9 percent, boosted by Beijing’s stimulus measures aimed at enhancing consumption. However, ongoing U.S.-Sino trade tensions could still undermine demand and disrupt supply chains.
