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Trade war worries persist despite oil rising on the back of China's rebounding imports

The oil prices rose on Monday, after Chinese data revealed a sharp rise in crude imports for March. However, concerns about the impact of the trade war between China and the United States on global economic growth weighed.

Brent crude futures rose 6 cents or 0.09% to $64.82 per barrel at 0632 GMT. U.S. West Texas Intermediate Crude Futures were trading at $60.59 a barrel. This is up 9 cents or 0.15%.

Data released on Monday showed that China's crude imports rose sharply in March compared to the previous two month and nearly 5% compared to a year ago. The increase was attributed to a rise in Iranian oil as well as a rebound in Russian deliveries.

Brent and WTI are down about $10 per barrel since the beginning of the month. Analysts have also revised their oil prices forecasts downwards, as the trade conflict between the two world's largest economies intensified.

Goldman Sachs predicts Brent will average $63 per barrel and WTI $59 per barrel for the rest of 2025. Brent is expected to average $58 in 2026 and WTI $55.

Analysts led by Daan Stuyven wrote in a report that they expect global oil demand to rise by only 300,000 barrels a day in the fourth quarter 2025, given the weak growth outlook. They also noted that this slowdown will be most pronounced for feedstocks used in petrochemicals.

BMI, an arm of Fitch Solutions cut its Brent price prediction to $68 a barrel from $76 for 2025, as they expect the slowing economy to reduce demand.

BMI reported that the Brent price differential between December 2025-2026 also entered contango, as investors priced-in concerns about oversupply and lack of demand. A contango market is one where the front-month price is lower than that of future months. This indicates no shortage in supply.

Beijing raised its tariffs against U.S. goods to 125%, retaliating to President Donald Trump’s decision to increase duties on Chinese products. The trade war is now more serious and could disrupt global supply chains.

Trump granted exemptions from steep tariffs for smartphones, computers, and other electronics, largely imported from China. But on Sunday, he announced that he would announce the tariff rate on semiconductors imported over the next few weeks.

The trade war has increased concerns that unsold exports may continue to drive down prices in China.

"China's inflation data were a window to an economy not ready for a trade war." In terms of year-on-year comparisons, consumer prices dropped for the second consecutive month, while producer price fell by 30%. This was revealed in a Moody's Analytics weekly note referring to April 10 data.

Baker Hughes reports that as companies prepare for possible demand declines, U.S. oil firms cut the number of oil rigs last week by the largest amount in a single week since June 2023. This is the third consecutive week the oil and gas rig count has been reduced.

Chris Wright, the U.S. Energy Secretary, said that Trump's plan for pressure on Iran over its nuclear program could potentially support oil prices.

Officials said that both countries had "positive" and constructive" talks on Saturday in Oman and agreed to meet again next week to discuss Tehran's rapidly expanding nuclear program.

In a recent note, ING analysts led Warren Paterson stated that "this may help reduce some of the sanctions risk affecting oil markets if the talks continue to move in the right directions." (Reporting from Katya Golubkova and Florence Tan in Tokyo; editing by Sonali Paul.)

(source: Reuters)