Oil Prices Fall as Oversupply Fears and US–China Trade Tensions Grow
Oil prices slipped again on Wednesday, extending their losses from the previous session. Traders reacted to the International Energy Agency’s (IEA) warning about a potential supply glut in 2026 and to rising US–China trade tensions that could weigh on global demand.
Crude Prices at Five-Month Lows
Brent crude futures fell by $0.09, or 0.14%, to $62.30 per barrel by 06:40 GMT. U.S. West Texas Intermediate (WTI) also eased $0.03, or 0.05%, to $58.67 per barrel. Both benchmarks ended the previous session at their lowest levels in five months.
IEA Warns of Larger Oil Surplus
On Tuesday, the IEA said the global oil market could face a surplus of up to 4 million barrels per day in 2026. This would be a bigger oversupply than previously forecast, as OPEC+ and other producers continue to ramp up output while demand remains sluggish.
“The market is increasingly focused on excess supply amid mixed demand signals,” said Emril Jamil, senior oil analyst at LSEG. “Easing geopolitical risks and intensifying trade tensions are putting additional pressure on prices,” he added.
US–China Trade Rift Adds More Pressure
The trade dispute between the United States and China, the world’s two largest oil consumers, has reignited. Both nations have imposed new port fees on cargo shipments, raising transport costs and disrupting freight flows. Analysts warn that the move could slow global economic growth and further reduce oil demand.
“The market’s attention remains on the renewed escalation in US–China trade tensions and the risks it poses to the global economy,” said Tony Sycamore, market analyst at IG.
Tensions intensified after China expanded rare earth export controls, while President Donald Trump threatened to raise tariffs on Chinese goods to 100% and tighten software export restrictions starting November 1.
Oversupply and Inventories Remain in Focus
Beyond trade concerns, analysts say the degree of oversupply will determine oil’s next move. “The key factor for oil prices now is the extent of the oversupply, as reflected in changes in global inventories,” said Yang An, analyst at Haitong Futures.
Traders are also awaiting weekly U.S. inventory data for further signals. According to a Reuters poll, crude stockpiles are expected to have increased by around 200,000 barrels last week, while gasoline and distillate inventories likely declined.
The American Petroleum Institute (API) will release its report at 4:30 p.m. EDT (2030 GMT) on Wednesday, followed by the U.S. Energy Information Administration (EIA) data at 10:30 a.m. EDT (1430 GMT) on Thursday. Both reports were delayed by one day due to the Columbus Day holiday.
