Opec and IEA bristle at Trump's trade posturing
The IEA and Opec say Trump’s trade plans are a threat to global growth
Protectionist measures like tariffs and trade wars threaten to undermine global economic growth and limit oil demand, the major oil organisations wrote this week in thinly veiled swipes at US president Trump’s recent trade manoeuvres.
In its monthly update, the International Energy Agency noted strong growth in global trade to 4.7% in 2017, from just 2.5% the previous year, saying this likely explains a robust 1.8% increase in global gasoil demand in 2017.
Opec this week also said global economic growth “has recovered significantly” and is now forecast at 3.8% this year. “Given the improvements in economic activity across the world, oil demand will be well supported in 2018.”
But both see a major potential obstacle ahead in the shape of Trump’s increasingly assertive efforts to recalibrate US trading conditions with other nations.
Echoing wider fears in the energy industry over the impact of aluminium and steel tariffs, the IEA said, “recent signs of protectionism from the US are a risk to the forecast, raising the possibility of a global trade war”. It added that a slowdown would have “strong consequences” for the oil market, particularly for fuel used in the maritime sector and in the trucking industry.
Opec said that “the most recent trade-related developments may provide challenges to the growth momentum as global trade has been an important factor contributing to the world economy”. It also said that Trump’s tariffs, and the potential consequences of the US fiscal stimulus on the nation’s debt, may dampen growth momentum.
In past trade wars, oil consumption has been an early victim as global commerce stagnates, something that would be a bitter blow to Opec’s re-balancing efforts.
The IEA slightly raised its forecast for oil demand this year to 99.3m barrels per day from 97.8m b/d in 2017. Noting that provisional data suggest strong starts to the year in China and India, the agency predicts a small build in stocks in Q1 and then draws for the rest of the year. “Market re-balancing is clearly moving ahead with key indicators—supply and demand are becoming more closely aligned.”