US EIA warns that tariffs and trade uncertainties will lower oil demand

The U.S. Energy Information Administration's (EIA's) monthly short-term Energy Outlook report on Thursday said that recent developments in global trade policies are expected to reduce global oil and fuel consumption growth through 2026.

As a result of the uncertainty created by a possible lower global growth rate and higher oil supplies, the U.S. Department of Energy’s statistical arm has cut its forecasts of U.S. oil demand and global oil consumption growth for this year and next.

Since U.S. president Donald Trump announced last week a blanket 10% duty on all U.S. imported goods and dramatically higher duties for dozens of trading partner, benchmark crude oil futures are at pandemic levels. China responded by imposing additional import duties on U.S. imports last Thursday.

Trump suspended the country-specific tariffs for 90 days on Wednesday, but increased the tariffs on Chinese imports to 125%. Also, a 10% tariff is being applied to all imports.

Analysts warn that escalating wars in the trade could slow down global economic activity, and reduce oil demand.

The EIA now expects global oil and fuel demand to grow by 900,000-barrels-per-day (bpd) from last year to around 103.6 million bpd this year, it said. The EIA had previously predicted a growth of 1.2 millions bpd for this year.

The agency has revised its forecast for next year to a demand growth of approximately 1.1 million barrels per day (bpd), down from 1.2 million. (Reporting and editing by Susan Fenton; Shariq Khan, Scott DiSavino)

(source: Reuters)