Growth in oil demand expected to slow sharply as a result of Trump’s tariffs

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Growth in oil demand is expected to slow sharply this year because of the negative impact of US tariffs on trade, the International Energy Agency has warned in its first forecast since Donald Trump’s “liberation day” announcement.

The Paris-based agency cut its expectations for oil demand growth this year by about a third from 1.03mn barrels a day to 730,000 b/d and signalled that further downward revisions were possible depending on how the US president’s tariff programme evolved.

“While imports of oil, gas and refined products were given exemptions from the tariffs announced by the United States, concerns that the measures could stoke inflation, slow economic growth and intensify trade disputes weighed on oil prices,” it said. “With negotiations and countermeasures still ongoing, the situation is fluid and substantial risks remain.”

Prices for Brent crude, the global benchmark, dipped below $60 a barrel last week for the first time in four years as traders weighed the prospect of recessions before Trump pulled back, pausing some of the tariffs for 90 days pending negotiations

Despite the pause, which had helped Brent recover to $67.84 a barrel by Tuesday morning in London, the sharp escalation in trade tensions prompted the IEA to lower the economic growth assumptions that underpin its forecasts, it said.

As a result, annual demand growth was expected to slow further next year to 690,000 b/d “as lower oil prices only partly offset the weaker economic environment”, it said in its first forecast for 2026.

The surprise decision of eight Opec+ members, led by Saudi Arabia, to increase output faster than expected from next month had added to the “downward spiral in oil prices” in the first half of April, it said.

However, the impact on supply was likely to be “much smaller” than the announced increase of 411,000 b/d, as several Opec+ members, including Kazakhstan, the United Arab Emirates and Iraq, were already producing well above their targets, it added.