WTI falls below $59.50 due to escalating US-China tensions, OPEC+ supply boost
- WTI price declines as ongoing US-China trade tensions continue to dampen the demand outlook.
- The US announced a steep increase in tariffs on Chinese imports, raising the total rate to 145%.
- OPEC+ plans to boost production by 411,000 bpd in May, heightening fears of a potential supply surplus.
West Texas Intermediate (WTI) crude oil price fell for a second straight session, trading around $59.30 per barrel during Asian hours on Friday. The decline comes amid rising US-China trade tensions, which are clouding the demand outlook.
On Thursday, the US announced that tariffs on Chinese imports had surged to 145%, with a new 125% levy added on top of an existing 20% duty. This move overshadowed US President Donald Trump's 90-day pause on tariff hikes for most other countries and heightened concerns about fuel demand from China, the world's largest Oil importer.
A prolonged US-China trade dispute threatens to dampen global trade, disrupt supply chains, and slow economic growth—developments that would also curb Oil consumption in both nations, which are the world’s top energy consumers.
The US Energy Information Administration (EIA) cut its global economic growth and Oil demand forecasts, warning that tariffs could significantly impact Oil prices. The agency now expects global Oil demand to grow by just 900,000 barrels per day (bpd) this year, down from its previous forecast of 1.2 million bpd, reaching about 103.6 million bpd. For 2026, demand growth is now estimated at 1 million bpd, also below prior expectations.
The EIA also revised down its oil price outlook for this year and next, citing increased uncertainty from weaker global growth and a potential rise in supply. Further weighing on prices, the OPEC+ alliance, including Russia, plans to raise output by 411,000 bpd in May, fueling concerns of a market surplus.
Meanwhile, the Trump administration imposed new sanctions on Iranian Oil networks, including a China-based storage facility, just days ahead of planned US-Iran talks. At the same time, the Keystone pipeline remains shut following a spill in North Dakota, with no timeline for reopening—posing additional supply risks.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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Author
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
