Oil holds ground as traders eye trade tensions

April 16, 2025 (MLN): Oil prices saw little change on Wednesday as shifting U.S. tariff policies fueled uncertainty, prompting traders to assess the potential impact of the U.S.-China trade war on economic growth and energy demand.

Brent crude futures increased by $0.7, or 1.08%, to $65.37 per barrel. 

West Texas Intermediate (WTI) crude futures rose by $0.60, or 0.98%, to $61.93 per barrel by [3:20 pm] PST. 

Global oil demand is expected to grow at its slowest rate in five years in 2025, according to the International Energy Agency.

The slowdown, along with tapering U.S. production gains, is attributed to U.S. President Donald Trump's tariffs on trading partners and their retaliatory measures.

"Investors continue to struggle in finding a catalyst to drive a more meaningful rebound, as global growth is widely expected to slow ahead with U.S. tariffs, which puts oil demand in jeopardy," said Yeap Jun Rong, market strategist at IG.

"The downward trend for oil prices remains intact and we may expect initial optimism around tariff rollbacks to fade, and the underlying macro headwinds on upcoming economic data could bring markets back to a more sobering reality," Yeap said.

World oil demand this year is expected to rise by 730,000 barrels per day, the IEA said, sharply down from the 1.03 million bpd it expected last month.

The reduction is larger than a cut in demand estimates made on Monday by the Organization of the Petroleum Exporting Countries, as Reuters reported.

he tariff dispute between the U.S. and China remains the most significant threat to the global economy and oil demand, said Imad Al-Khayyat, a research lead at London Stock Exchange Group.

"Each passing week without signs of easing in this standoff increases the likelihood of a global recession and lowers the price ceiling," Al-Khayyat said.

Concerns over Trump's escalating tariffs, combined with rising output from OPEC+, a group comprising OPEC and its producing allies such as Russia, have already dragged oil prices down roughly 13% so far this month.

The uncertainty surrounding trade tensions has led several banks, including UBS, BNP Paribas and HSBC, to cut their crude price forecasts.

Trump has ratcheted up tariffs on Chinese goods to eye-watering levels, prompting Beijing to slap retaliatory duties on U.S. imports.

This intensifying trade war between the world's two biggest economies has raised fears in markets of a potential global recession.

Meanwhile, U.S. crude oil stocks rose 2.4m barrels in the week ended April 11, while gasoline inventories fell 3m barrels and distillate stocks dropped 3.2m barrels, market sources said, citing American Petroleum Institute figures on Tuesday.

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