Oil prices have fallen, pressured by escalating trade tensions between China and the United States and a revised forecast from the International Energy Agency (IEA) projecting a significant crude oil surplus. The renewed trade friction has dampened investor appetite for risk assets, contributing to the decline in oil values. China has placed restrictions on five US entities, including one of South Korea’s largest shipbuilders, in response to US actions, raising concerns about further retaliatory measures.
West Texas Intermediate (WTI) crude oil settled near $US59 a barrel on Tuesday, a 1.3 per cent drop and its lowest level since May. Brent crude also experienced downward pressure, trading near $US62 a barrel. These price movements reflect broader market anxieties related to potential disruptions in global economic activity stemming from the trade dispute.
The IEA, based in Paris, has increased its forecast for a record oil oversupply in 2026. The agency projects that global crude supplies will exceed demand by almost 4 million barrels per day next year. This unprecedented surplus is expected to place continued downward pressure on oil prices. The predicted oversupply raises concerns about potential instability in the energy market.
The IEA serves as an energy advisor to developed countries on energy policy, while providing statistics, analysis, and recommendations.
