The International Energy Agency has significantly reduced its global oil demand growth forecasts for this year, citing the substantial risks posed by Donald Trump’s trade tariffs. Initially projecting a rise of 1.03 million barrels per day, the agency now anticipates growth to reach only 730,000 barrels per day due to the economic uncertainties introduced by the tariffs. With the potential for further downward revisions pending the development of a trade war, the IEA also foresees a possible slowdown in oil demand growth next year to 690,000 barrels per day.

Following Trump’s imposition of tariffs on global trade, concerns over inflation, economic growth, and trade disputes have weighed on oil prices, with the benchmark price plummeting from nearly $75 to under $60 per barrel. While prices have since rebounded to around $65, fears of a global economic slowdown persist, hindering a full oil market recovery.

Major financial institutions like UBS and Goldman Sachs have adjusted their oil price forecasts downward in anticipation of a global economic recession. UBS now projects a price of $68 per barrel for this year, while Goldman Sachs expects prices to average $63 per barrel before dropping to $58 next year.

The IEA has also revised its forecasts for US oil production growth downward by 150,000 barrels per day, highlighting the challenges faced by US shale producers who require prices above $65 per barrel to turn a profit. Additionally, OPEC and its allies have announced plans to increase collective oil production, albeit with potential limitations due to some countries already exceeding their quotas.

Despite these developments, the IEA cautions that uncertainties persist, emphasizing the volatility of the macroeconomic landscape.