Trade tensions have significantly escalated since our previous Oil & Gas Sector Update in November 2024. In April 2025, United States President Trump imposed a reciprocal tariff of up to 145% on Chinese imports (vs the previous threat of a 60% tariff) and 10% tariffs on US imports from more than 90 other countries (in a tariff pause after a significantly high tariff rate on trading partners). In response, China swiftly raised tariffs on US goods to 125%, intensifying trade war. This marks a new phase in the global trade war. On April 22, IMF lowered 2025 global GDP forecast to 2.8% from 3.3% in its January forecast. They also lowered the 2026 global growth rate to 3.0% from the previous 3.3%. In addition, the IMF slashed its forecast for growth in global trade by 1.5% to 1.7%, half the growth seen in 2024, reflecting the accelerating fragmentation of the global economy. These factors all weigh on global oil demand. 

We lower our average 2025 Brent oil price forecast by 7% to USD65/bbl (-18% YoY), following the IEA, EIA, and OPEC lowering their 2025 global oil demand projections by 0.7 mb/d (on a median basis) in their April 2025 reports vs their November 2024 reports (page 9). Although OPEC+ extended the production cut from end-2025 to end-2026 as well as introduced new compensatory cuts totaling ~1mb/d for 2025, rising production from the US (+0.3mb/d) and potentially higher production from other non-OPEC countries, could potentially push supply over demand. The EIA forecasts a steady surplus of 0.5–0.7 mb/d in 2025–2026, a shift from the balanced market seen in 2024 (page 7).

For the longer term, we also lower our 2026-2029 Brent oil price forecast to USD65/bbl. This reflects the potential impact of higher tariffs after negotiations (but lower than April 2’s proposals) which could slow global economic growth and reduce oil demand. Furthermore, as the world is transitioning to clean energy, there might be further potential downside risk to oil demand forecasts.

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