Oil Prices Slide Amid Escalating US-China Trade War and Global Demand Concerns

Oil prices fell on Monday as fears grew that the intensifying trade dispute between the United States and China could weaken global economic growth and reduce fuel demand. Both Brent and West Texas Intermediate (WTI) crude futures dipped as markets reacted to the deepening rift between the world’s two largest economies.

At 10:22 a.m. Saudi time, Brent crude futures were down 22 cents, or 0.34%, trading at $64.54 per barrel. US WTI crude futures also slipped 22 cents, or 0.36%, to $61.28 per barrel. Both benchmarks have declined by around $10 a barrel since the start of the month.

The price slump comes amid growing concerns that the prolonged trade war is beginning to weigh heavily on global economic prospects. Beijing’s decision on Friday to hike tariffs on US imports to as high as 125% marked a sharp escalation in retaliation to US President Donald Trump’s recent tariff increases on Chinese goods. The move has amplified fears of disrupted global supply chains and slowing industrial activity.

In response, President Trump offered some relief by exempting smartphones, computers, and other select electronics—largely imported from China—from higher tariffs. However, US Commerce Secretary Howard Lutnick confirmed on Sunday that key technology items, including semiconductors, will face separate tariffs within the next two months.

Goldman Sachs, reflecting a more cautious outlook, revised its oil price forecasts for the coming years. The bank expects Brent to average $63 and WTI $59 for the rest of 2025, before falling to $58 and $55, respectively, in 2026. Analysts led by Daan Struyven projected that global oil demand will rise by only 300,000 barrels per day in the fourth quarter of 2025, with petrochemical feedstocks expected to be the hardest hit due to the economic slowdown.

Moody’s Analytics echoed the sentiment, noting China’s weakening inflation indicators as a sign of its vulnerability in the trade standoff. “Consumer prices fell for a second consecutive month year-on-year, and producer prices have declined for 30 straight months,” the agency said, referencing the latest data released on April 10.

As economic uncertainty looms, energy firms in the US are taking precautionary steps. According to Baker Hughes, US energy companies cut the number of oil rigs last week by the most in any single week since June 2023. This marks the third consecutive weekly decline in oil and gas rigs, suggesting expectations of softer demand ahead.

Despite the bearish indicators, oil prices may find some support from geopolitical developments. US Energy Secretary Chris Wright stated on Friday that Washington could potentially halt Iran’s oil exports as part of Trump’s strategy to pressure Tehran over its nuclear activities.

Officials also reported that the US and Iran held “positive and constructive” talks in Oman over the weekend, with plans to reconvene next week to address growing concerns over Iran’s nuclear program.

With global economic uncertainty rising and geopolitical tensions simmering, markets are bracing for continued volatility in oil prices.