By Daniel Takieddine, Co-founder and CEO, Sky Links Capital Group
Oil prices fell to their lowest point in five months on Tuesday, extending their downward trend. Mounting concerns of a global supply surplus weighed on the market, compounded by renewed trade tensions between the U.S. and China.
The latest International Energy Agency (IEA) market report added to the concerns and forecasts a growing oversupply of oil. The IEA has increased its global supply growth projections to 3 million barrels per day for this year and 2.4 million for 2026, pointing to production hikes from OPEC+ and robust output from the Americas. In contrast, the agency has lowered its demand growth estimates to approximately 700,000 barrels per day for both years, reinforcing expectations of a significant surplus.
Adding to the bearish outlook, trade tensions are injecting fresh uncertainty into the market. A brief rebound in prices on Monday, sparked by hopes for de-escalation in US-China trade talks, quickly faded. The market was further affected by a reduced geopolitical risk premium as hopes for stability in the Middle East grew.
Looking ahead, markets could closely monitor US-China relations, OPEC+ supply, and upcoming inventory data from the EIA to determine the market’s next direction. Without a positive surprise from inventory reports or broader macroeconomic data, prices could remain under pressure.