Oil Prices Rebound as Traders Balance Tariff Shock and Demand Outlook
Crude prices regained ground on Tuesday as traders reassessed the fallout from renewed U.S.-China trade tensions and rising global supply.
Brent crude climbed above $63 a barrel, while West Texas Intermediate (WTI) hovered near $60, recovering part of Friday’s 3.8% slump. The rebound followed comments from President Donald Trump, who struck a softer tone toward Beijing after hinting last week at new tariffs and export restrictions.
The trade dispute between the world’s two largest oil consumers has reignited volatility across energy markets. Crude has now fallen for two consecutive weeks amid growing concerns that OPEC+ production increases could create a supply surplus later this year.
Shifting Market Signals
According to OPEC’s latest monthly report, global oil demand is expected to rise by 1.3 million barrels per day in 2025 and 1.4 million barrels in 2026. However, the International Energy Agency (IEA) projects that output will outpace consumption next year, potentially leading to a record surplus.
Market structure is already showing early warning signs. Brent futures spreads beginning in March 2026 have moved into contango, a pattern where near-term prices trade below longer-dated contracts – typically an indicator of oversupply.
For now, traders are left balancing optimism over resilient demand with renewed geopolitical uncertainty – a mix that’s keeping oil stuck between recovery hopes and the threat of another downturn.
Source: Bloomberg
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