[NEW YORK / LONDON] Oil prices were little changed on Tuesday (Apr 15) as investors digested the latest headlines on US President Donald Trump’s on-again, off-again tariffs and tried to figure out how much the US-China trade war could reduce global economic growth and oil demand.
Brent crude futures fell 21 cents, or 0.3 per cent, to settle at US$64.67 per barrel, while US West Texas Intermediate (WTI) crude fell 20 cents, or 0.3 per cent, to settle at US$61.33.
Vacillating US trade policies have created uncertainty for global oil markets and prompted the Organization of the Petroleum Exporting Countries (Opec) to lower its demand outlook on Monday.
The International Energy Agency followed on Tuesday with its projection that global oil demand in 2025 will grow at its slowest rate for five years due to worries about economic growth from Trump’s trade tariffs.
That tariff uncertainty caused several banks, including UBS, BNP Paribas and HSBC, to cut their crude price forecasts.
“Should the trade war further escalate, our downside risk scenario case – ie, a deeper US recession and a hard landing in China – could see Brent trading at US$40 to US$60 (per barrel) over the coming months,” said UBS analyst Giovanni Staunovo.
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Worries about Trump’s tariffs, along with a supply hike by Opec+, a group comprising Opec and its producing allies such as Russia, have already caused oil prices to plunge by roughly 13 per cent so far this month.
Oil prices gained some support after Trump said on Monday he was considering a modification to the 25 per cent tariffs imposed on foreign auto imports from Mexico and other places.
“The US administration has announced multiple conflicting tariff policy changes, from … exempting electronics, to then revealing that this exemption would be temporary and also announcing a modification to the 25 per cent tariff imposed on auto and auto parts,” analysts at energy consulting firm Gelber and Associates said in a note.
In the US, bank executives warned consumer spending faces huge risks if the upheaval sparked by Trump’s trade policy persists.
US import prices unexpectedly fell in March, pulled down by decreasing costs for energy products, the latest indication that inflation was subsiding before Trump’s sweeping tariffs came into effect.
Some analysts, however, worry that Trump’s tariff policies could boost inflation, making it difficult for the US Federal Reserve to reduce interest rates.
The Fed and other central banks use higher interest rates to combat rising inflation, which boosts consumer costs and can reduce economic growth and demand for energy.
Despite Trump’s pro-oil drilling policies, the US Energy Information Administration (EIA) projected US oil production will peak at 14 million barrels per day in 2027 and maintain that level through the end of the decade, before rapidly declining.
US oil inventory data from the American Petroleum Institute trade group is due later on Tuesday and from the EIA on Wednesday.
Analysts forecast energy firms pulled about 1.0 million barrels of oil from US stockpiles during the week ended Apr 11. That compares with a build of 2.7 million barrels during the same week last year and an average build of 4.2 million barrels over the past five years (2020 to 2024).
China and Europe
In China, the world’s second-biggest economy behind the US, exports rose sharply in March after factories rushed out shipments before the latest US tariffs took effect, but an escalating Sino-US trade war has darkened the outlook for factories and economic growth.
China’s Premier Li Qiang called on the country’s exporters to diversify their markets to cope with “profound” external changes, and vowed to support more domestic consumption.
In Europe, the European Central Bank said some banks curbed access to credit last quarter and expect to keep tightening credit standards due to increasing concerns about the economic outlook, due to Trump’s tariffs.
In Germany, the biggest economy in Europe, investor morale in April posted its strongest decline since Russia invaded Ukraine in 2022, again due to uncertainty unleashed by US tariffs. REUTERS
