Experts warn of trade tensions on oil demand

Global oil prices remain volatile, with Brent crude briefly falling below $60 per barrel—a signal, according to Dr. Carole Nakhle, of deeper imbalances in the oil demand outlook amid trade tensions and rising supply.

Nakhle attributes the price drop to weakening demand prospects, worsened by U.S.-China trade tensions. She notes that the announcement of sweeping U.S. tariffs increased fears of an economic slowdown, especially in China, the world’s largest crude importer. Demand had already been underwhelming, and the tariffs disrupted early signs of recovery.

At the same time, oil supply surged. Strong growth from non-OPEC producers and OPEC+’s accelerated release of previously withheld barrels have created an oversupplied market. “Too much supply is now chasing too little demand,” she argues.

Nakhle also points to internal friction within OPEC+. Some compliant members may have run out of patience with countries not honoring production cuts, prompting a strategic move to protect market share. However, she warns that the current oil price environment exposes all members to financial strain.

Looking at the broader picture, she emphasizes that prolonged trade disputes could further weaken the oil demand outlook. Yet, a slower economy and cheaper fossil fuels may paradoxically delay the energy transition and postpone the global peak in oil demand.

As uncertainty continues, Nakhle believes volatility will define oil market dynamics in the near term.