Oil Set for Third Straight Weekly Drop on Tariff Fears

Oil prices are poised for a third consecutive weekly decline, as investors grapple with concerns over the potential impact of U.S.-China trade tensions on global economic growth and energy demand. As of Friday, Brent crude futures were trading at $69.09 per barrel, down 1.2% for the week, while West Texas Intermediate (WTI) crude futures were at $62.23 per barrel, down 1.5% (Economies.com, 2025).

The recent decline in oil prices can be attributed to a combination of factors, including increased U.S. shale production, weakening global demand, geopolitical risks, and increased OPEC+ production. According to the International Energy Agency (IEA), U.S. oil production is set to rise by 1.5 million barrels per day (mb/d) in both 2024 and 2025, reaching 53.1 mb/d and 54.6 mb/d, respectively (IEA OMR, 2025). This increased supply has put downward pressure on oil prices. Additionally, the economic outlook for some major oil-consuming countries, such as China, has been mixed, further dampening demand prospects (IEA OMR, 2025).

Geopolitical tensions, such as the U.S.-China trade war, can also impact oil prices through changes in demand and supply dynamics. In 2025, China retaliated against U.S. tariffs by imposing tariffs on a range of U.S. products, including crude oil, coal, and LNG. This move led to a decrease in WTI crude oil futures, which fell below $72 per barrel on Tuesday, February 10, 2025 (Economies.com, 2025). The U.S.-China trade war has the potential to disrupt global oil supply chains, as it can lead to reduced trade between the two countries and increase uncertainty in the market.



However, some analysts remain optimistic about the long-term prospects for oil prices. According to a report by Goldman Sachs, the global oil market is expected to tighten in the second half of 2025, as demand recovers and OPEC+ production cuts take effect (Goldman Sachs, 2025). The report also notes that the recent decline in oil prices is a result of temporary factors, such as increased U.S. shale production and a slowdown in Chinese demand, and that the fundamentals of the global oil market remain strong.



In conclusion, the recent decline in oil prices can be attributed to a combination of increased U.S. shale production, weakening global demand, geopolitical risks, and increased OPEC+ production. While the U.S.-China trade war has the potential to disrupt global oil supply chains and impact oil prices, some analysts remain optimistic about the long-term prospects for oil prices. As the global economy recovers and demand for oil increases, the fundamentals of the global oil market are expected to remain strong. Investors should closely monitor the evolving situation and consider the potential impact of geopolitical tensions on global oil demand and supply dynamics.