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(Reuters) – Oil fell on Tuesday to near a two-week low as investors lowered their demand growth expectations due to the trade war between the United States and China, the world’s two biggest economies.
Brent crude futures fell by $1.22, or 1.85%, to $64.64 per barrel by 1119 GMT. U.S. West Texas Intermediate crude fell $1.1, or 1.8%, to $60.95 a barrel.
“The market continues to worry about the obvious; that a drawn out trade war will sap demand, adding downward pressure on prices in search for a new equilibrium where weaker demand is balanced by lower supply from high-cost producers, especially in the U.S.” said Saxo Bank analyst Ole Hansen.
President Donald Trump’s push to reshape world trade by imposing tariffs on all imports into the United States has made it probable that the global economy will slip into a recession this year, according to a majority of economists in a Reuters poll.
China, hit with the steepest of those tariffs, has responded with its own levies against U.S. imports, stoking a trade war between the top two oil consuming nations. That has prompted analysts to sharply lower their oil demand and price forecasts.
Barclays  on Monday cut its 2025 Brent crude price forecast by $4 to $70 a barrel, citing elevated trade tensions and a pivot in production strategy by the OPEC+ group as drivers of a 1 million barrel per day oil supply surplus this year.
Meanwhile, several members of OPEC+, which comprises the Organization of the Petroleum Exporting Countries and its allies, will suggest an acceleration of output hikes for a second consecutive month in June, sources told Reuters last week.
“Another production hike from OPEC+ could not happen at a worse time when sentiment is already weak, and with Kazakhstan not showing much interest in reducing production, a well supplied market is what we can look forward to into the second half,” Saxo Bank’s Hansen said.
Kazakhstan increased oil exports by 7% year-on-year to 19.52 million metric tons (1.63 million barrels per day) in January-March thanks to a supply boost via the Caspian pipeline, Reuters calculations based on official data and sources showed on Tuesday.
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