Oil prices fell further on Wednesday, triggered by escalating US-China trade tensions and a prediction by the International Energy Agency (IEA) of a supply surplus in 2026.
Brent crude went down by 48 cents or 0.8 per cent to settle at $61.91 a barrel and the US West Texas Intermediate (WTI) crude declined by 43 cents or 0.7 per cent to $58.27 per barrel.
The US and China have renewed their trade war over the last week, with the world’s two largest oil consumers imposing additional port fees on ships carrying cargo between them, a move that could disrupt global freight flows.
Last week, China announced it would increase rare earth export controls and US President Donald Trump threatened to raise tariffs on Chinese goods to 100 per cent and tighten software export curbs from November 1.
On Wednesday, US Treasury Secretary Scott Bessent insisted that the US did not want to escalate the trade conflict, adding that President Trump is ready to meet Chinese President Xi Jinping in South Korea later this month.
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 the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) raise output while demand remains sluggish.
Bank of America said Brent prices could slip below $50 a barrel if US-China trade tensions intensify while OPEC+ production ramps up. The bank warned that growing supply from OPEC+ members, particularly Saudi Arabia, Iraq, and the UAE, has created a “persistent surplus that could swell inventories to 2020 highs.”
Meanwhile, 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 revenues to the Russian government.
Russia was the second-biggest producer of crude oil in the world after the US in 2024, according to US energy data.
President Trump said that Indian Prime Minister Narendra Modi had agreed to stop buying Russian crude, a development that could ease oversupply fears, and indicated that he would now attempt to make China do the same thing.