Oil hits 5-month low on trade tensions, IEA prediction

Brent crude futures dropped 48 cents, or 0.8%, to settle at $61.91 a barrel

Oil prices eased on Wednesday to a five-month low on escalating China-U.S. trade tensions and the International Energy Agency’s prediction of a supply surplus in 2026.

Brent crude futures dropped 48 cents, or 0.8%, to settle at $61.91 a barrel. That was the lowest settlements for the benchmark since May 7 for a second day in a row.

The world’s two largest oil consumers have renewed their trade war over the last week, with China and the U.S. imposing additional port fees on ships carrying cargo between them. The tit-for-tat moves could disrupt global freight flows.

Last week, China announced it would increase rare earth export controls and U.S. President Donald Trump threatened to raise tariffs on Chinese goods to 100% and tighten software export curbs from November 1.

On Wednesday, U.S. Treasury Secretary Scott Bessent insisted that Washington did not want to escalate the trade conflict, adding Trump is ready to meet Chinese President Xi Jinping in South Korea later this month.

Deflationary pressures persisted in China, with both consumer and producer prices dropping in September. A prolonged property market slump and trade tensions also weighed.

Renewed pose a “material” downside risk to the economic outlook, making it more important that the U.S. central bank cut its benchmark interest rate, bank Governor Stephen Miran said on Wednesday. Looser economic policies can boost economic growth and demand for oil.

U.S. retail sales excluding motor vehicles and parts likely posted further gains in September, data from the Chicago Fed showed, though part of the rise probably reflected higher prices.

On Tuesday, the IEA said the global oil market could face a surplus next year of up to 4 million barrels per day, wider than its previous forecast, as OPEC+ and others raise output and demand remains sluggish.