Crude Oil Prices Dip on Wednesday Amid Supply Glut Concerns and Rising U.S.-China Trade Tensions

Crude oil prices continued their downward trajectory in early trading on Wednesday, reflecting renewed concerns about an oversupplied market and weakening global demand.

Brent crude futures slipped by 12 cents, or 0.19%, to $62.27 a barrel, while U.S. West Texas Intermediate (WTI) crude declined by 10 cents, or 0.17%, to $58.60. Both benchmarks settled at their lowest levels in five months during the previous session, signaling persistent bearish sentiment among investors.

IEA Warns of a Larger Supply Surplus in 2026

The International Energy Agency (IEA) added further pressure to market outlooks after predicting a significant global oil surplus in 2026.

According to the agency, the oil market could face an oversupply of up to 4 million barrels per day, a larger glut than earlier anticipated. The forecast attributes this to rising production from OPEC+ and non-OPEC producers, coupled with slower demand growth as economies transition toward renewable energy and improved energy efficiency.

U.S.-China Trade Tensions Cloud Demand Outlook

Demand-side risks have also been amplified by escalating U.S.-China trade tensions. Both nations introduced new port fees on ocean carriers, adding costs to global trade routes.

Additionally, China imposed sanctions on five U.S.-linked subsidiaries of South Korean shipbuilder Hanwha Ocean, following Washington’s tougher trade stance. The situation intensified after China expanded rare earth export controls, while U.S. President Donald Trump threatened 100% tariffs on Chinese goods starting November 1. These developments are raising fears of a slowdown in industrial activity and fuel consumption.

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Upcoming U.S. Inventory Reports in Focus

Traders are now awaiting fresh supply data for further market direction. The American Petroleum Institute (API) will release its weekly oil stock report later on Wednesday, followed by the U.S. Energy Information Administration (EIA) data on Thursday, which could offer insights into domestic consumption trends.

Conclusion

With rising inventories, a projected global supply glut, and deteriorating trade relations between the world’s largest economies, oil markets remain under pressure. Unless demand conditions improve or OPEC+ intervenes with production cuts, prices may continue to face downward momentum in the near term.

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