Oil Demand Growth Revised Lower by IEA Amid Trade Tensions

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--The macro-economic outlook for the world points to a slowdown in both this year and next, though the speed at which the situation is changing makes it difficult to gauge the future, the Paris, France-based International Energy Agency (IEA) said.

The IEA on Tuesday lowered its global outlook for oil demand by 300,000 barrels per day (BBL/d) relative to the prior month's estimate.

"Growth is expected to slow further in 2026, to 690,000 BBL/d, but risks to the forecasts remain rife given the fast-moving macro backdrop," the agency said in its market report for April. "The downgrade comes on the heels of robust oil consumption in 1Q25, up by 1.2 million BBL/d year-on-year--its strongest rate since 2023."

U.S. President Donald Trump has upended a global trade order that's existed since the end of World War II with a tariff agenda that's left few countries spared. His strategy, however, has been highly volatile. He announced a so-called Liberation Day alongside reciprocal tariffs on most major trading partners, only to reverse course in favor of a general 10% import tax on most goods.

A tit-for-tat tariff exchange with China, however, has roiled markets. Both have escalated an all-out trade war, with import taxes mounting for both sides. China last week said it would raise tariffs on U.S. goods from 84% to 125%, with no off-ramp in site.

Broader markets were hammered by Trump's original announcements, only to falter further in response to disputes with China. The price of crude oil hit a low not seen since the early days of the COVID-19 pandemic, and has struggled to retrace its steps.

West Texas Intermediate (WTI), the U.S. benchmark for the price of oil, was trading near $61 per barrel on Tuesday, up from lows in the mid-$50s, but still below the point at which shale drillers estimate they can make a profit.

"After a period of relative calm, global oil markets were roiled by a barrage of trade tariff announcements in early April," the IEA stated. "Benchmark crude oil prices plunged to their lowest levels in four years on a sharp escalation in trade tensions and the prospect of higher supplies from some OPEC+ countries."

The Organization of Petroleum Exporting Countries (OPEC) and non-member state allies operate as OPEC+, a group that opted earlier this month to unravel supply restraints.

Market trends have even caught the attention of U.S. government agencies. The Energy Information Administration (EIA), the statistical branch of the U.S. Department of Energy, was forced to re-run its models for its market report for April after Trump's tariff announcements.

The results were bad. The EIA lowered its forecast for global oil consumption by 400,000 BBL/d to just 900,000 BBL/d. The agency estimated that WTI would average $63.88 per barrel this year, a forecast that's nearly $7 per barrel lower than the prior month.

"We expect that prices for crude oil and other commodities will continue to experience significant volatility as market participants assess the effects of trade policies," the EIA said.

The IEA, meanwhile, suggested the U.S. energy sector may see headwinds from Trump's tariff policies. Last month, energy firms told the Federal Reserve Bank of Dallas the economy wasn't expected to be supportive of upstream activity. The IEA added that Chinese tariffs on U.S. fuels could lead to a 150,000 BBL/d contraction in U.S. supply.

That, however, should not lead to a global deficit, though the IEA said that "oil markets are in for a bumpy ride and considerable uncertainties hang over our forecasts for this year and next."

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).