The outlook for the second half of the year and into 2026 is not very optimistic. The April PMI data released yesterday from China was very weak and we’re not expecting much improvement in the months ahead. When we’ve analyzed the potential impact of the US-China trade war on oil demand, the geographic focus is clear, but sectorally, we expect the greatest hits to come in areas like petrochemicals, diesel, and anything industrial-related. Bunker fuel is also vulnerable due to its connection with global trade. We’re already seeing early signs of a slowdown in trade flows, with movement of goods between the US and China taking a notable hit. There’s some speculation that the US might ease pressure on China and roll back some reciprocal tariffs. But even if they cut them by about half to 60%. that’s still near-embargo levels and unlikely to meaningfully revive trade flows.

Outlook for global oil demand growth?

We’ve already cut our global liquids demand estimate by 450, 000 b/d for the second half of this year and into 2026. And the downside risk could be even larger, potentially over a million b/d. This swings the global balance toward a significant surplus and if OPEC+ adds more supply on top of that, things will look extremely bearish for the oil market. We’re forecasting about 700, 000 b/d of global demand growth for 2025. Historically, when demand growth is this low, we’ve been in or near recessions.

Do these lower oil prices ultimately benefit Trump?

Trump promised to lower oil prices, so you could argue he’s succeeded. But instead of doing it by boosting US production, he may have triggered a global recession through his trade policies. Lower oil prices are certainly not helping US producers and if OPEC+ continues to add supply, we could see prices fall into the $50s.

What’s behind Saudi’s reasoning to increase supply at this time?

Undercompliance. The production cuts have been in place for several months now, and there’s been growing frustration toward some member countries not fully adhering to the agreed cuts. Kazakhstan comes to mind, but it’s not the only one. Saudi Arabia is tired of dragging the rest of the group along and making sacrifices largely on its own, along with a few compliant producers. We've already seen supply increases in April and again in May, with expectations of another significant rise in June and possibly beyond. This is a signal to the rest of OPEC+ to fall in line and do their share.