THE International Energy Agency has downgraded its global oil demand forecast by some 300,000 barrels per day amid an escalating trade war between the US and China.

Just last month the IEA predicted global demand would top the 1m bpd mark in 2025 up from 830,000 bpd in 2024.

But despite imports of oil, gas and refined products being exempted from US tariffs, Brent crude prices collapsed following Trump’s “liberation day” tariff announcement, hitting a low of $62.82 on April 8, before recovering to $64.88. Concerns that tariffs would drive inflation and slow down economic growth prompted the rout on oil prices and are the main contributors to the IEA’s revised forecast.

Paired with the decreased demand forecast is a rise in global supply by 590,000 bpd to 103.6m bpd. While this increase is still being driven largely by non-Opec+ countries, the surprise decision of Opec+ to triple production targets for May to 411,000 bpd, which contributed to the drop in crude prices. Some nations, however, are already thought to be exceeding existing targets, dampening the impact from the announcement.

Demand for 2026 is set to decrease to 690,000 bpd, the agency said, amid a “fragile macroeconomic environment” and the continued rise in electric vehicle usage.

That means non-Opec+ supply growth looks set to “comfortably eclipse” global demand growth, the IEA said. Despite US supply slowing down, Brazil, Canada and Guyana will all be major sources of growth.

As Lloyd’s List reported previously, a sharp drop in oil prices combined with oversupply in some markets could be good for tankers in the short term.

But the longer-term picture is bleaker. Demand and price declines will eventually lead to production cuts, which will either change trading routes and affect tonne-mile demand, or simply reduce cargo volume, or both.