Oil prices slide on surplus and weak demand

Oil prices fell for a second day amid mounting concerns about excess supply and weakening demand prospects, while renewed US–China trade tensions added to market unease. Global benchmarks have slipped to their weakest levels since early May as investors weighed forecasts of a growing surplus alongside slowing consumption.

The International Energy Agency warned of a potential surplus approaching 4 million barrels per day by 2026 as producers boost output while demand softens. The IEA’s latest outlook also trimmed next year’s demand growth, citing weaker economic expansion and accelerating electrification as headwinds. Goldman Sachs analysts forecast further downside, projecting Brent could drop toward $52 a barrel by late 2026.

Brent and US West Texas Intermediate extended recent losses after reports of tit‑for‑tat measures between Washington and Beijing, including additional port fees on bilateral cargo, raised fears of broader trade disruption that could dent oil consumption and freight flows. Senior commodity strategists noted the on‑again, off‑again state of US–China talks complicates demand forecasts and pressurises prices.

US President Donald Trump signalled some openness to easing tariffs if China makes concessions ahead of a planned summit with President Xi Jinping, while warning Beijing has been paying large tariff sums to the US. He also said he had been assured by India’s prime minister that New Delhi would curb purchases of discounted Russian crude, comments that touch on shifting global oil flows following Moscow’s post‑2022 trade realignments.

On the supply side, higher output from OPEC+ members and the United States has intensified concerns about a widening surplus. Market participants noted that short‑term support from geopolitical or production cuts could be limited if demand remains sluggish.

Separately, European energy ministers are meeting to coordinate a common approach to reducing Russian gas imports, a process that could further reshape regional fuel mixes and influence oil and gas market dynamics.

Overall, analysts say the combination of rising supply, subdued demand growth and trade policy uncertainty points to a prolonged period of pressure on prices, with the risk that market sentiment could worsen if either economic indicators or policy disputes amplify downside demand risks.