Oil prices slid on Tuesday as renewed tensions between the United States and China rattled global markets, while fresh attacks on Russian oil infrastructure by Ukrainian drones added geopolitical uncertainty.
By 12 PM WAT, Brent crude was down 2.46% at $61.76 per barrel, and U.S. West Texas Intermediate (WTI) fell 2.62% to $57.93, both hovering near five-month lows. Earlier in the session, Brent had dropped $1.01, or 1.6%, to $62.31, while WTI was down $0.95, or 1.6%, at $58.54.
The selloff followed new concerns over the global economy after Beijing and Washington exchanged fresh trade restrictions, reigniting fears of another tariff war between the world’s two largest economies.
Trade Tensions Pressure Oil Markets
Analysts said the uncertainty surrounding the next round of U.S.-China negotiations has weighed heavily on sentiment.
PVM Oil analyst Tamas Varga explained that traders are still assessing the potential fallout from escalating export controls and tariffs.
“Markets remain nervous about the possibility of reigniting the trade war between the world’s two economic behemoths,” Varga noted.
U.S. Treasury Secretary Scott Bessent confirmed that President Donald Trump remains committed to meeting Chinese President Xi Jinping in South Korea later this month. The talks aim to ease tensions following Beijing’s decision to tighten export controls on rare earths and Washington’s threat to impose 100% tariffs and software export curbs from November 1.
On Tuesday, China retaliated by sanctioning five U.S.-linked subsidiaries of South Korean shipbuilder Hanwha Ocean. Both countries also announced new port fees on shipping companies, a move that could increase the cost of transporting goods, including crude oil.
IEA Raises Supply Outlook, Lowers Demand Forecast
The International Energy Agency (IEA) added further pressure to the market after it raised its forecast for global oil supply growth this year, citing the OPEC+ group’s output hikes.
At the same time, the agency lowered its demand growth outlook, pointing to a slower global economy and weaker industrial activity.
In its separate report, OPEC+ said the global supply shortfall could shrink further in 2026 as the group proceeds with planned production increases.
The Brent six-month spread and WTI spread both narrowed to their lowest levels in months, a signal of easing backwardation and growing near-term supply. Analysts said this trend indicates that traders are earning less from selling oil on the spot market because supplies are becoming more readily available.
Ukraine’s Drone Strikes Target Russian Oil Infrastructure
Meanwhile, Ukraine intensified its drone campaign against Russian energy assets.
A major oil terminal in Feodosia, located in Russian-occupied Crimea, caught fire on Monday after Ukrainian drones struck at least five oil reservoirs, according to a security official quoted by Reuters.
The SBU intelligence service and Ukrainian special forces reportedly coordinated the attack, which also targeted two Russian electrical substations.
Satellite images from NASA’s FIRMS monitoring service confirmed large heat signatures at the terminal site.
Crimea’s Moscow-installed governor acknowledged the incident, the second in less than a week, as part of a wider campaign that has seen over 30 Ukrainian strikes on Russian energy sites since August. The attacks have disrupted Russia’s refining capacity, leading to domestic fuel shortages and rationing.
Conflict Escalates Beyond the Energy Front
Russian forces launched new airstrikes on Kharkiv, Ukraine’s second-largest city, on Monday, damaging a hospital and cutting power to 30,000 residents. Four people were injured.
In response, Ukrainian President Volodymyr Zelenskyy announced plans to visit the United States this week to discuss additional military aid, including long-range weapons such as Tomahawk missiles.
He is expected to meet President Trump, U.S. lawmakers, and defense contractors to strengthen support for Ukraine’s energy and security sectors.
In Europe, German intelligence chief Martin Jaeger warned lawmakers that Russia’s aggression poses a “direct threat” to the EU, cautioning that an “icy peace” could quickly erupt into a military confrontation.
Jaeger said Germany remains Russia’s top target in Europe due to its economic influence and military support for Kyiv.
Market Outlook: Uncertainty Dominates
Traders now face a volatile mix of geopolitical risk and weak demand fundamentals.
The combination of trade friction, slowing economies, and energy infrastructure attacks has injected fresh uncertainty into an already fragile market.
With oil prices trading near multi-month lows, analysts say sentiment may remain bearish in the short term — unless geopolitical disruptions tighten supply faster than expected.
