Oil prices decline under trade tensions and weak demand
Oil prices continued to fall as global trade tensions raised concerns about future demand. The decline was led by Brent slipping below $65 per barrel, while West Texas Intermediate stayed near $61. These drops extended a two-day loss, driven largely by weak economic signals and escalating trade disputes between the US and China.
A key US manufacturing index showed a sharp downturn, signaling economic stress tied to President Trump’s trade levies. Investors are watching this closely, as oil demand often reflects broader economic health.
Oil faces largest monthly loss since 2021
Brent is on track for its steepest monthly drop since 2021. This comes amid a backdrop of tit-for-tat tariffs and renewed OPEC+ production. Trade friction between Washington and its partners has weakened oil prices. Even though some nations are entering discussions with the US, China has refused to engage for now.
These developments have disrupted investor confidence and clouded the oil market’s outlook. As negotiations stall, traders remain cautious.
Stockpiling fades, consumption patterns shift
According to Arne Lohmann Rasmussen, chief analyst at A/S Global Risk Management, recent growth was mostly due to stockpiling. He says the oil market had been propped up by pre-tariff hoarding, which is now waning. This could lead to lower US growth if consumption pulls from inventory instead of supporting production.
As storage levels normalize, oil demand may struggle to keep pace. A shift toward drawing from existing reserves will likely affect pricing further.
US-Iran talks could reshape oil supply dynamics
Talks between Washington and Tehran could also impact oil markets. There are signs of diplomatic progress on Iran’s nuclear activities. If sanctions ease, Iranian oil might re-enter global supply chains, shifting the balance further.
Iran is presenting itself as a future investment opportunity despite current restrictions. If oil flows from the country increase, global prices could react quickly.
Iberian blackout hits oil refineries
In Europe, Spain and Portugal are recovering from a major power outage—the worst in years. Several oil refineries halted operations as a result. Power has now mostly returned, and processing plants are slowly resuming operations.
This temporary disruption in refinery output added to the week’s volatile oil dynamics. While short-lived, such outages highlight the fragility of the infrastructure supporting global oil supply.