NEW YORK: Oil prices dipped on Wednesday, holding near a five-month low for a second day, pressured by escalating US-China trade tensions and the International Energy Agency’s prediction of a supply surplus in 2026.
Brent crude futures fell 23 cents, or 0.4percent, to USD62.16 a barrel at 11:11 a.m. EDT (1511 GMT). US West Texas Intermediate futures fell 14 cents, or 0.2percent, to USD58.56. Both benchmarks were headed for their lowest closes since May 7 for a second day in a row.
Bank of America said Brent prices could slip below USD50 a barrel if US-China trade tensions intensify while OPEC+ production ramps up. On Tuesday, the IEA said the global oil market could face a surplus next year of up to 4 million barrels per day, wider than its previous forecast, as OPEC+ and others raise output and demand remains sluggish.
The trade dispute between the world’s two largest oil consumers has reignited over the last week, with the US and China imposing additional port fees on ships carrying cargo between them. The tit-for-tat moves could disrupt global freight flows.
US Treasury Secretary Scott Bessent on Wednesday insisted that Washington did not want to escalate the trade conflict, stressing that President Donald Trump is ready to meet Chinese President Xi Jinping in South Korea later this month.
Last week, China announced it would increase rare earth export controls and Trump threatened to raise tariffs on Chinese goods to 100percent and tighten software export curbs from November 1. Deflationary pressures persisted in China, with both consumer and producer prices falling in September, as a prolonged property market slump and trade tensions also weighed.
In the US, investors are becoming more convinced that the Federal Reserve will keep cutting interest rates. On Tuesday, Fed Chair Jerome Powell left the door open to further rate cuts and said the end of the central bank’s long effort to shrink the size of its holdings may be near. Looser economic policies can boost economic growth and demand for oil.
Britain on Wednesday targeted Russia’s two largest oil companies, Lukoil and Rosneft, and 51 shadow fleet tankers in what it described as a new bid to tighten energy sanctions and choke off Kremlin revenues.
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