Why Oil Prices Are Expected to Slow Down

Oil prices are expected to moderate due to abundant supply, according to the International Energy Agency. ‘I don’t expect significant disruption in oil markets thanks to rising production from America. As a result of these trends, I expect moderate oil prices in the coming days and weeks,’ said IEA Executive Director Fatih Birol in an interview with Bloomberg Television. Speculation that the U.S. and China may reach a trade deal this week will provide only a ‘small boost’ to oil prices, unless major geopolitical events occur, Birol added. The oil market will see a surplus as output from the ‘American pentagon’—the U.S., Canada, Brazil, Guyana, and Argentina—outpaces demand growth, which is slowing due to China’s shift away from heavy industry and combustion-engine vehicles. The IEA recently raised its forecast for a record oil oversupply by 2026. Crude oil prices rose nearly 8% last week after new U.S. sanctions on Russia’s top producers sparked concerns over physical supply flows. Refineries in India, a major market for Russian oil, announced they would halt purchases, while some in China also reacted with panic.