Trade War Sparks Demand Concerns and Forecast Revisions
Crude prices declined after prolonged U.S.-China trade tensions re-ignited fears of a slowdown in global demand. Analysts at PVM warned that stalling negotiations are eroding confidence in economic growth, prompting a wave of oil demand downgrades.
Barclays cut its 2025 Brent crude forecast by $4 to $70 per barrel, citing the potential for a 1 million barrel-per-day supply surplus this year fueled by softening demand and a shift in OPEC+ output strategy.
U.S. President Donald Trump’s broad tariff stance has raised the specter of a global recession, with China retaliating by imposing its own levies on U.S. goods. This trade standoff between the world’s top two oil consumers has undermined bullish oil prices projections and accelerated bearish market expectations.
OPEC+ Eyes Output Increases as Stockpiles Build
Adding to the supply-side pressure, several OPEC+ members are reportedly pushing for increased production in June—marking a second straight month of potential supply expansion. Meanwhile, U.S. crude inventories are expected to have risen by 500,000 barrels in the week ended April 15, according to a Reuters poll. The American Petroleum Institute’s stockpile estimates are due Tuesday, with markets watching closely for confirmation of growing U.S. crude supplies.
Investor Sentiment Worsens with Refinery Outages and Buyback Risks
Monday’s session saw major contracts lose around $1 per barrel, partially due to unexpected refinery outages in Spain linked to a widespread power blackout. Though power has been restored, investor confidence remains shaky.
Big Oil is also under pressure. Falling prices have analysts questioning whether companies like Chevron and BP will scale back shareholder returns. Chevron may slash buybacks below its $10–20 billion range, while Exxon is expected to maintain payouts due to stronger cash reserves. Still, analysts warn that capital spending cuts may follow if prices remain subdued.
