Crude oil prices remained largely flat on Friday but are on track for a second consecutive weekly drop, as escalating U.S.-China trade tensions heighten fears of slowing global demand.
As of 05:22 GMT, Brent crude rose by 0.2% to $63.47 a barrel, while U.S. West Texas Intermediate (WTI) also edged up 0.2% to $60.21. Despite Friday’s modest gains, both benchmarks have endured steep weekly losses—Brent is set to fall 3.2%, while WTI is down 2.9%. Last week, both had already suffered double-digit declines, with Brent and WTI shedding 11%.
The ongoing tariff conflict between the world’s two largest economies is rattling investor confidence, with potential ripple effects across global trade and oil consumption. A continued standoff could dampen freight activity, hinder supply chains, and weigh on economic output, analysts warn.
Trade War Threatens Global Oil Demand
The uncertainty surrounding the U.S.-China trade dispute intensified this week after President Joe Biden raised tariffs on Chinese imports to 145%, even after pausing similar measures against other trading partners. In retaliation, Beijing implemented new import levies on American goods.
Analysts at BMI Research noted that rising tensions could suppress oil prices for the foreseeable future:
“Prices will remain under pressure as investors monitor the direction of U.S.-China negotiations,” they wrote Friday.
Daniel Hynes, senior commodity strategist at ANZ, echoed these concerns. According to the bank’s estimates, oil consumption could fall by 1% if global GDP growth slips below 3%—a threshold now under threat from protectionist policies.
Additional pressure is mounting from revised forecasts by the U.S. Energy Information Administration (EIA), which trimmed its oil demand outlook for both the domestic and global markets. The EIA cited slower economic growth and the destabilizing impact of ongoing tariffs as major headwinds.
Market Awaits Key OPEC+ Decision
Eyes are now on the upcoming OPEC+ meeting scheduled for May 5, which could offer critical signals about future supply adjustments.
Key Takeaways:
- Brent crude: $63.47/barrel (down 3.2% this week)
- WTI crude: $60.21/barrel (down 2.9% this week)
- U.S. tariffs on China: 145%
- Forecast: Oil consumption may drop 1% if growth dips below 3%
- OPEC+ meeting: May 5, potential for supply change
BMI analysts suggest that any announcement hinting at increased output could further depress prices, triggering a renewed selloff. As market uncertainty persists, investors are bracing for more volatility in the weeks ahead.
