Oil prices inched higher on Tuesday, buoyed by new tariff exemptions proposed by U.S. President Donald Trump and a rebound in China’s crude oil imports in anticipation of tighter Iranian supply. Brent crude futures climbed by 12 cents, or 0.2 percent, reaching $65 per barrel by 03:50 GMT, while U.S. West Texas Intermediate crude increased by 13 cents, or 0.2 percent, to $61.66.
Tariff exemptions provide market relief
“Trump granted exemptions on electronic tariffs and signalled an auto tariff relief, both of which are seen as setbacks from the previously announced import levies, hence, providing some relief to risk assets, including oil,” Reuters reported, citing stated independent market analyst Tina Teng.
“However, the rally in stocks and growth-sentiment commodities is sceptical, as his policy is unpredictable.”
In the latest twist in Trump’s volatile trade war, he indicated he was considering a modification to the 25 percent tariffs imposed on foreign auto and auto parts imports from Mexico, Canada, and other regions. The fluctuating U.S. trade policies have generated uncertainty for global oil markets, prompting OPEC to lower its demand outlook for the first time since December.
Impact of U.S. trade policies on oil markets
The Trump administration announced on Friday that it would grant exclusions from tariffs on smartphones, computers, and several other electronic goods, most of which are imported from China. This decision contributed to both oil benchmarks settling slightly higher on Monday.
On Sunday, Trump mentioned he would announce the tariff rate on imported semiconductors within the week, and a Monday Federal Register filing revealed that the administration had initiated an investigation into semiconductor imports on April 1.
“The market is digesting fast-moving policy developments on the tariff front while balancing them with nuclear talks between the U.S. and Iran,” noted ING analysts in a Tuesday report. “Clearly, the market is more focused on tariffs and what they mean for oil demand.”
U.S. plans to curb Iranian oil exports
U.S. Energy Secretary Chris Wright remarked on Friday that the United States could halt Iranian oil exports as part of Trump’s strategy to exert pressure on Tehran regarding its nuclear program. Additionally, recent data indicated that China’s crude oil imports in March were up nearly 5 percent from a year earlier, with a surge in arrivals of Iranian oil expected due to tighter U.S. sanctions enforcement.
Kazakhstan announced on Monday that its oil output fell by 3 percent in the first two weeks of April compared to the March average, confirming a Reuters report. Nevertheless, this decline still keeps its production above its OPEC+ quota.
Read more: Oil prices drop to $64.47 as U.S.-China trade war affects global growth outlook
EIA cuts oil demand forecasts amid trade tensions
Last week, the U.S. Energy Information Administration (EIA) reduced its oil demand forecasts through 2026, cautioning that tariffs were obscuring the global economic outlook and could severely impact oil prices in the upcoming months. The EIA also revised its oil price predictions for 2025 and 2026, underscoring the increasing uncertainty in energy markets due to fears of slowing growth.
The EIA adjusted its forecast for 2025 global oil demand growth downward by about 300,000 barrels per day to 900,000 bpd. It now anticipates 2026 oil demand to rise by 1 million bpd, a decrease from earlier projections of 1.2 million bpd. Additionally, the EIA expects Brent to average approximately $67.87 a barrel in 2025, significantly lower than its previous forecast of $74.22 a barrel.
Ongoing trade war worsens oil price trends
Oil prices fell on Monday as escalating worries about the ongoing trade war between the United States and China could stifle global economic growth and weaken fuel demand. Brent crude futures were down 29 cents, or 0.45 percent, at $64.47 a barrel at 01:26 GMT. Meanwhile, U.S. West Texas Intermediate crude futures traded at $61.23 a barrel, down 27 cents, or 0.44 percent. Both contracts have seen a decline of about $10 a barrel since the start of the month, as tensions between the world’s two largest economies have intensified.
Future oil price projections
Goldman Sachs anticipates that Brent will average $63 and WTI will average $59 for the remainder of 2025. Furthermore, it projects Brent to average $58 and WTI $55 in 2026. The firm predicts that global oil demand in the fourth quarter of 2025 will rise by only 300,000 barrels per day year-on-year, “given the weak growth outlook,” according to a note from analysts led by Daan Struyven. This demand slowdown is expected to be particularly pronounced for petrochemical feedstocks.
In a significant escalation, Beijing raised its tariffs on U.S. imports to 125 percent on Friday in retaliation against President Trump’s decision to impose higher duties on Chinese goods. This intensification of the trade war poses a considerable threat to global supply chains. On Saturday, Trump approved exclusions from steep tariffs on smartphones, computers, and other electronics primarily imported from China. However, U.S. Commerce Secretary Howard Lutnick indicated on Sunday that critical technology products from China would face new duties within the next two months, along with semiconductors.
