Oil prices remained largely unchanged on Tuesday as investors assessed the latest developments surrounding U.S. tariffs and their potential impact on global economic growth and oil demand.
Brent crude futures dropped by 21 cents, or 0.3%, closing at $64.67 per barrel, while U.S. West Texas Intermediate (WTI) crude fell by 20 cents, or 0.3%, to settle at $61.33.
The market has been dealing with uncertainty due to fluctuating U.S. trade policies. This uncertainty has led the Organization of the Petroleum Exporting Countries (OPEC) to revise its oil demand forecast downward. On Tuesday, the International Energy Agency (IEA) projected that global oil demand growth in 2025 would be the slowest in five years, partly due to concerns about the economic impact of U.S. tariffs.
The ongoing trade policy changes have caused some banks, including UBS, BNP Paribas, and HSBC, to lower their crude price forecasts. UBS analyst Giovanni Staunovo mentioned that if the trade conflict worsens, it could result in lower oil prices, with Brent potentially trading between $40 and $60 per barrel in the coming months.
Oil prices have already dropped by around 13% this month, influenced by concerns over Trump’s tariff policies and an increase in supply from OPEC+. However, some support for oil prices was seen after Trump indicated that he was considering modifying the 25% tariffs on foreign auto imports from countries such as Mexico.
Analysts at energy consulting firm Gelber and Associates noted that the U.S. administration has introduced conflicting tariff policies, which have contributed to uncertainty in the market.
In the U.S., bank executives have expressed concern that continued trade disruptions could negatively impact consumer spending. Data for March showed that U.S. import prices unexpectedly declined, largely due to falling energy costs, suggesting that inflation may be easing ahead of broader tariff implementations.
Some analysts remain cautious, however, believing that Trump’s tariff policies could drive inflation, complicating the Federal Reserve’s ability to lower interest rates. Higher interest rates can increase consumer costs and reduce economic growth, which could negatively affect demand for energy.
The U.S. Energy Information Administration (EIA) has projected that U.S. oil production will peak at 14 million barrels per day in 2027, before seeing a decline toward the end of the decade.
Data from the American Petroleum Institute (API) and EIA regarding U.S. oil inventories are due later this week. Analysts expect a drawdown of about 1.0 million barrels from U.S. stockpiles for the week ending April 11, compared to a larger build during the same period in 2024.
China and Europe
In China, exports surged in March as factories increased shipments before the latest U.S. tariffs were implemented. However, the ongoing trade dispute between the U.S. and China has raised concerns about future factory activity and overall economic growth. Premier Li Qiang has encouraged Chinese exporters to diversify their markets and has promised to support domestic consumption.
In Europe, the European Central Bank reported that some banks restricted access to credit in the first quarter of the year, and it expects further tightening due to increasing concerns about the economic impact of U.S. tariffs. In Germany, the largest economy in the European Union, investor sentiment in April experienced its sharpest decline since Russia’s invasion of Ukraine in 2022, again due to the uncertainties linked to U.S. trade policies.
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