Oil Daily | Goldman Sachs Predicts Oil Oversupply Amid Tariff Wars and OPEC's Temporary Supply Increase

【Global Oil Supply and Demand】

Goldman Sachs analysts forecast an oversupply in the oil market this year, aligning with other major commodity traders and the International Energy Agency. Analysts predict slower U.S. economic growth due to tariff wars, potentially reducing crude oil demand globally. OPEC's temporary supply increase further adds to the oversupply outlook.

Economic data from China presents mixed signals for oil demand. Industrial production slowed, yet retail sales increased. Chinese refinery throughput rose 2.1% year-on-year, driven by holiday travel and the start of new refineries, adding 200,000 bpd to demand. Property market stabilization may eventually impact oil demand.

【Oil-Producing Countries Dynamics】

OPEC plans a temporary increase of 138,000 bpd in supply as part of winding down 2022 production cuts, sensitive to price changes. Russia's OPEC official suggests the supply decision might reverse by May if prices decrease. Tariff wars may hinder U.S. economic growth, affecting oil demand.

【Latest Oil Policies】

President Trump's tariff wars are expected to negatively impact U.S. growth, potentially making goods and commodities costlier, thereby reducing crude oil demand. Analysts believe tariffs could be a bearish driver for the oil market amid global oversupply concerns.

【Industry News】

U.S. attacks on Yemeni Houthis increased geopolitical tensions, impacting crude prices. Maritime transport expenses rose due to longer shipping routes avoiding conflict areas, adding to fuel demand. China's refinery output increased, driven by holiday travel demand and new refinery operations, despite mixed economic signals.

【Company News】

Chinese refiners saw a 2.1% production increase due to holiday demand and a new refinery start. State-owned refineries led the rise, while teapots reduced output due to high costs from U.S. sanctions on Russian and Iranian crude. Sinopec and Zhenhua Oil ceased Russian crude purchases over sanctions concerns.

PetroChina and CNOOC continued buying Russian oil at reduced rates amid sanction worries. Independent refiners increased purchases of Russia’s ESPO blend, delivering more cargoes primarily to teapot refiners in Shandong and Jiangsu provinces, despite earlier reductions due to ESPO supply uncertainties.