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Oil Market Turns Lower
Global oil prices fell sharply this week, with Brent crude sliding more than 2% to around $61.50 per barrel — the lowest level in five months.
Investor sentiment weakened after the U.S.–China trade dispute intensified and the International Energy Agency (IEA) warned of a potential global supply surplus in 2025.
IEA Warns of Rising Supply Surplus
According to the IEA’s latest outlook, global oil supply in 2025 could rise by about 3 million barrels per day (bpd) — led by OPEC+ producers and growth in the U.S. Meanwhile, demand growth is projected at only 0.7 million bpd, signaling a clear imbalance.
This could lead to a surplus of roughly 600,000 bpd in the coming year, putting further pressure on prices and raising inventories worldwide.
“The market balance is turning negative again — supply growth is exceeding expectations while demand stagnates,” the IEA report said.
U.S.–China Trade Friction Adds Pressure
At the same time, renewed tariff threats and export restrictions between Washington and Beijing have sparked fears of slower global trade and weaker manufacturing output.
Oil markets are highly sensitive to such developments since the two nations account for nearly 40% of global energy consumption.
Economists warn that prolonged trade friction could reduce industrial and transportation activity, cutting into fuel demand.
OPEC Holds a Different View
In contrast, OPEC maintains a more optimistic outlook, expecting demand to strengthen in emerging economies.
However, analysts note that if prices remain below $60 per barrel for long, producers may cut back on new investments, tightening supply later on.
What to Watch Next
Analysts highlight several key factors to monitor in the weeks ahead:
- OPEC+ meeting — possible new output cuts or revised quotas;
- U.S. EIA inventory data — to confirm if supply is indeed outpacing demand;
- China’s manufacturing PMI — a key indicator of industrial demand;
- Currency markets — a stronger U.S. dollar makes oil costlier in other currencies.
Summary
The recent drop in oil prices reflects market anxiety over global economic health and growing geopolitical tension between the U.S. and China.
If the IEA’s surplus outlook materializes and trade hostilities persist, Brent crude could fall further — potentially below $60 per barrel.
