Crude oil price movements
Oil prices fell slightly during trading on Tuesday amid escalating trade tensions between the US and Europe over Greenland, but price losses remained limited due to the weak US dollar and positive economic data from China, the world's largest importer of crude oil.
Oil prices today
Brent crude fell 1% to around $63.00 per barrel, while US West Texas Intermediate crude fell to $58.70 per barrel, with markets remaining cautious.
Weak dollar supports commodity prices
Despite the decline, the weak US dollar has provided relative support to oil and commodity prices in general, as the decline in the US currency makes oil less expensive for holders of other currencies, helping to limit selling pressure in the market.
Strong economic data from China
Oil prices received additional support after economic data showed China's gross domestic product grew by 5% last year after adjusting for deflation, according to the latest figures released by the world's second-largest economy and largest importer of crude oil.
This data reflects an improvement in the pace of Chinese economic activity, reinforcing expectations of continued energy demand in the coming period.
Trade tensions limit oil gains
However, oil prices lacked a clear direction, as markets focused on US President Donald Trump's threats to impose higher US tariffs on a number of European countries due to his desire to buy Greenland, which reignited fears of a trade escalation that could negatively affect global growth and energy demand.
Future outlook and key challenges
Overall, oil price movements remain hostage to a delicate balance between supportive factors, such as a weak dollar and improving Chinese economic data, and pressures from global trade tensions and geopolitical uncertainty, keeping the market volatile until clarity emerges on these issues.
Looking beyond these daily fluctuations, most estimates point to a major challenge in 2026: oversupply.
Global surplus concerns:
The International Monetary Fund has lowered its oil price forecast for 2026 by 5.6%, expecting an average price of $62.13 per barrel of Brent crude.
This reduction is mainly due to global supply growing at a faster pace than demand, with the US Energy Information Administration forecasting a surplus of up to 2.83 million barrels per day in 2026.
Financial institutions forecasts:
The views of major financial institutions are consistent with this context.
Goldman Sachs expects an average price of $56 for Brent in 2026, noting that "market rebalancing will likely require lower oil prices" to absorb the expected surplus.
The US Energy Information Administration also expects Brent to fall to an average of $55 in the first quarter of the year.
