U.S. tariffs and the trade war between the United States and China will likely weigh on economic growth this year and are likely to result in oil demand growing at a slower pace, UBS analysts said on Monday.

As such, the bank reduced its Brent forecasts by $12/bbl to $68-bbl, and expects WTI to trade at $64/bbl.

"There’s a high positive correlation between U.S. equities and crude oil prices at present, which usually indicates that demand factors are driving prices," Giovanni Staunovo, Strategist, UBS Switzerland AG said in a note.

Such a high correlation was seen during the global financial crisis and the COVID-19 pandemic.

"Some indicators, such as the futures curve being in backwardation (i.e., downward sloped), suggest that the oil market remains tight, but tariffs together with the ongoing uncertainty over theUS administration's next steps—that is, which tariffs are added next—are likely to weigh on economic growth."

Hence, UBS reduces it global oil demand growth forecast by 0.4mbpd to 0.8mbpd for 2025, as lower oil prices are also likely to reduce U.S. oil supply growth slightly this year.

Goldman Sachs meanwhile, expects oil prices to decline through the end of 2025 and into 2026, with Brent (CO1:COM) and WTI (CL1:COM) averaging $63 and $59 per barrel, respectively, this year and falling to $58 and $55 next year, due to rising recession risks and increased OPEC+ supply.

West Texas Intermediate (CL1:COM) crude futures were up +0.83% to $62.03 at the time of writing, while Brent crude (CO1:COM), the international benchmark, was +0.78% at $65.26 a barrel and has declined over 13% YTD.

Elsewhere, China’s commodity imports mostly fell year-on-year in March, with declines in coal (XAL1:COM), natural gas (NG1:COM), iron ore (SCO:COM), and soybean (S_1:COM).

Crude oil imports surged 20% to a 19-month-high, driven by record Iranian flows and stockpiling by private refiners due to concerns over US sanctions.

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