Oil Prices Slip as U.S.-China Trade War Weighs on Global Demand Outlook

Crude oil prices continued their downward trend on Tuesday, pressured by growing fears that the ongoing trade war between the United States and China could dampen global economic growth and energy demand.

As of 06:35 GMT, Brent crude futures fell by 51 cents, or 0.8%, to $65.35 per barrel, while U.S. West Texas Intermediate (WTI) crude futures dropped 50 cents, or 0.8%, to $61.55 per barrel. This decline follows Monday’s losses, where both benchmarks slid by more than $1.

“Markets are watching U.S.-China trade talks very closely,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.

“The fear is that worsening relations between the world’s two largest economies could trigger a global recession, which would severely impact oil demand. Until there are clear signs of demand recovery in mainland China, oil prices are likely to stay under pressure.”

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U.S. President Donald Trump’s aggressive tariff strategy, aiming to overhaul global trade, has intensified recession risks. In retaliation, China has implemented its own set of tariffs, escalating tensions between the world’s two top oil-consuming nations.

This hostile trade environment has led analysts to significantly slash their oil demand and price forecasts. Barclays recently cut its 2025 Brent crude price estimate by $4, projecting it will now average $70 a barrel.

The bank cited ongoing trade tensions and strategic production shifts by the OPEC+ alliance, which could result in a surplus of 1 million barrels per day this year.

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Adding to the downward pressure, sources told Reuters that several members of OPEC+ are expected to advocate for accelerated output increases for a second straight month during their upcoming June meeting.

“A significant drop in oil prices seems likely if oil-exporting countries continue to ramp up production,” noted oil analyst Philip Verleger.

Traders are also awaiting the American Petroleum Institute’s latest report on U.S. crude oil inventories, which is scheduled for release later on Tuesday. These figures could offer further insights into the supply-demand balance in the world’s largest oil-consuming country.

For now, uncertainty surrounding trade negotiations and demand prospects continues to cast a shadow over global oil markets.