Although imports of oil, gas and refined products are exempt from U.S. tariffs, fears that these tariffs will increase inflation and slow economic growth cast a shadow over oil prices.
The International Energy Agency cut its forecast for global oil demand by about 300,000 barrels per day amid the escalating trade war between the United States and China.
Last month, the International Energy Agency predicted that global demand would exceed one million barrels per day in 2025, up from 830,000 barrels per day in 2024.
But despite the exemption of imports of oil, gas and refined products from US tariffs, Brent crude prices collapsed following Trump’s announcement of the “Liberation Day” tariffs, reaching a low of $62.82 on April 8, before recovering to $64.88. Fears that tariffs will push up inflation and slow economic growth have led to lower oil prices, the main factor that helped adjust the IEA’s forecast..
Global supply will rise by 590,000 bpd to 103.6 million bpd, aligning with the lower demand forecast. Non-OPEC+ countries continue to drive most of this growth. However, OPEC+ unexpectedly decided to triple its May production targets to 411,000 barrels per day, which helped push crude oil prices lower. Some countries already produce above their current targets, which reduces the impact of the new announcement.
Demand will drop by 2026 to 690,000 barrels per day due to a “fragile macroeconomic environment” and the sustained rise in electric vehicle usage.
The IEA added that this means that supply growth from non-OPEC+ countries looks set to comfortably exceed global demand growth. Despite the slowdown in U.S. supply, Brazil, Canada and Guyana will be major sources of growth.
Shrinking oil spreads point to a more relaxed market
In the wake of the sharp drop in oil prices, spreads along the futures curves narrowed significantly last week, according to Carsen Fritz, commodities analyst at Commerzbank.
Brent crude is still hovering around $65.00 a barrel, having recovered from a near four-and-a-half-year low of $58.18.
Brent futures spreads narrowed sharply as oil prices fell.
The difference between Brent’s next contract due and one that matures after one year is just over one US dollar temporarily. The last time the spread between these two contracts fell was in December 2023. At the end of March, it was still close to $5.
The lower oil price premium with short-term delivery points to expectations of a more relaxed oil market, although the spread widened again to more than two US dollars by the end of last week. It should be noted that the spread between Brent’s first two futures contracts returned to 75 US cents on Friday, thus at a similar level to the end of March.
The contango structure, the bullish forward Brent curve, will only continue from spring 2026 onwards. Due to the emergence of oversupply, it was expected to occur earlier.
Lloyd’s List previously reported that a sharp drop in oil prices, coupled with oversupply in some markets, could be beneficial for tankers in the short term, mitigating the impact of this declaration
But the long-term picture is darker. Lower demand and prices will eventually reduce production, which will both change trading trajectories and affect demand per ton/mile, or simply lower cargo volume, or both.
Oil and metal prices move cautiously amid trade tensions
Brent crude is trading within a set price range, while copper and silver prices are gradually advancing amid ongoing uncertainty over US tariffs.
Brent crude is still hovering around $65.00 a barrel, having recovered from a near four-and-a-half-year low of $58.18.
Last week’s rally, which ranged between $65.68 and $65.74, represents resistance. If surpassed, the April 7 high could be $67.11, and the September-March low of $68.215 and $68.455, next. It should be noted that the spread between the first two Brent futures contracts returned to 75 US cents on Friday, thus at a similar level to the end of March.
Secondary support is below Monday’s low of $63.635 between the previous Monday’s low of $62.305 and Friday’s low of $62.395.
Copper is heading towards the 55-day SMA at $4.7473, having surpassed the resistance zone of $4.4698-$4.4983. Due to reverse polarity, it is now a support zone. This price consists of mid-October, November and January highs, as well as the lows in late February.
Another possible slight support can be observed along the 200-day SMA at $4.4074.
The spot silver price rebounded from an eight-month low of $28.315 an ounce pushed it to the fifty-day SMA of $32.42, which has been resistance over the past three days.
The March 21 low is at $32.65, which could also form resistance. There may be slight support around the March 11 low at $31.81. Below it, the 200-day SMA zigzag at $30.94. Despite the slowdown in U.S. supply, Brazil, Canada and Guyana will be major sources of growth.
