Oil prices experienced an upward trend alongside other risk assets following the U.S. President’s temporary suspension of reciprocal tariffs for most trading partners, excluding those who have already retaliated. ING commodity analysts Warren Patterson and Ewa Manthey indicate this action reverts tariffs to the initial 10% level.
However, China remains subject to increased tariffs, with the U.S. raising tariffs to 125% in response to China’s retaliatory tariffs of 84% on U.S. goods. While the tariff pause offers a degree of market respite, significant trade-related uncertainty persists. This ongoing uncertainty is anticipated to continue exerting downward pressure on global economic growth, thereby impacting oil demand. Nevertheless, current market conditions are comparatively more favorable than those observed in recent days.
The ICE Brent forward curve suggests an improved oil supply outlook, particularly across specific segments of the curve. While the near-term curve exhibits backwardation, it transitions into contango from the January 2026 contract onward. Furthermore, the Brent Dec-25 – Dec-26 spread has shifted into contango, collectively indicating a potentially weaker market balance in the longer term.
