Oil slides on US-China tensions and IEA warns of 2026 surplus

Oil prices slid to multiweek lows this week after renewed tensions between the United States and China and a warning from the International Energy Agency that the market could face a substantial supply surplus in 2026. West Texas Intermediate traded around $58 a barrel and Brent near $62, with sessions this week seeing drops ranging from about 1.5 percent to more than 4 percent as traders weighed weaker demand prospects against rising output.

The immediate market reaction followed a series of trade actions and threats between Washington and Beijing. U.S. officials warned of proposed tariff increases on Chinese imports, while China expanded export controls on rare earths, imposed sanctions on several foreign-linked firms, and introduced retaliatory port fees on vessels with U.S. links. Those measures have raised shipping costs and complicated flows of crude to Asia, a key destination for U.S. exports.

Analysts pointed to rising freight rates as a practical constraint on trade. Baltic Exchange data showed costs to move crude from the U.S. Gulf Coast to Asia climbed more than 15 percent in a week, to just above $11 million per voyage, tightening the economics of shipments to the...