Thursday 16/October/2025 – 12:41 AM
Oil prices fell on Wednesday to their lowest levels in five months, affected by escalating trade tensions between the United States and China and the International Energy Agency’s expectations of an oversupply next year.
Brent crude futures fell 48 cents, or 0.8%, to $61.91 per barrel at settlement, while US West Texas Intermediate crude futures fell 43 cents, or 0.7%, to $58.27 at settlement.
Both crude oil prices hit their lowest settlement levels since May 7 for the second day in a row, and Bank of America warned that Brent crude prices could fall below $50 a barrel if trade tension escalates and the OPEC+ alliance increases its production.
Trade dispute between the United States and China
This decline is partly due to the renewed trade dispute between the United States and China, the largest oil consumers, as the two countries imposed additional duties on cargo ships, which threatens to disrupt global shipping flows.
Last week, Beijing announced tightening restrictions on the export of rare earth elements, while Trump vowed to impose 100% tariffs on Chinese goods. On the other hand, US Treasury Secretary Scott Besent said that Washington does not want to escalate the trade dispute, stressing President Trump’s readiness to meet his Chinese counterpart Xi Jinping in South Korea later this month.
However, Federal Reserve Board member Steven Meieran warned that renewed trade tensions pose a material downside risk to the economic outlook, making it more important for the central bank to cut its benchmark interest rate to support economic growth and oil demand.
Prices also took a hit from expectations from the International Energy Agency, which said yesterday, Tuesday, that the global oil market may face an oversupply next year of up to four million barrels per day, which is a larger surplus than expected.
This comes as OPEC+ producers and its competitors continue to raise production and weak global demand. In a separate context, Britain today imposed sanctions on Lukoil and Rosneft, the two largest Russian oil companies, and on 51 oil tankers from the shadow fleet, in a new effort to tighten sanctions on the Russian energy sector and limit its revenues.
