The trade war between the US and China and a broader decline in world economic growth are weakening the demand for oil and pushing prices down, the International Energy Agency said on Friday.
The Paris-based agency cut its forecast for oil demand growth this year and next as trade tensions weigh on activity in the energy-hungry manufacturing sectors around the world, report agencies.
“The prospects for a political agreement between China and the United States on trade have worsened. This could lead to reduced trade activity and less oil demand growth,” the agency said in a monthly report on the energy market.
The IEA cut its forecast for oil demand growth by 0.1 million barrels a day, to 1.1 million barrels this year and to 1.3 million barrels a day in 2020.
It said that tensions in the Persian Gulf have heightened concerns. But the biggest impact on demand comes from trade disputes and lower growth. “The outlook is fragile with a greater likelihood of a downward revision (to demand) than an upward one,” the IEA said.