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Oil Demand And Global Growth Could Be Slowed By Trump’s Trade War, Warns OPEC

Oil Demand And Global Growth Could Be Slowed By Trump’s Trade War, Warns OPEC
According to a warning issued by OPEC on Wednesday, global economic growth would be slowed down by the protectionist trade policies of U.S. President Donald Trump.
In its monthly oil market report, the 14-nation oil cartel has identified as a number of headwinds for the global economy amidst which the possible negative results of the Trump's recently announced tariffs on the import of steel and aluminum. A number of countries have nearing their growth limits and rising interest rates are among the other headwinds identified.
There are many countries that have threatened the U.S. with retaliatory tariffs to Trump's tariffs as the policy of the U.S. has sparked a wave of fear among economists and markets about a slowdown of global economy because of a trade war.
According to OPEC, "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."
There have been forecasts issued by OPEC about the global oil supply in 2018 outstripping demand as supplies from the U.S. and other non-OPEC oil producers increase. It is amidst such an environment that the warning in comes from the oil cartel
That is a potential risk of global crude prices again going down because of the disturbance of the delicate balance, by oversupply of the same, that the global oil market has managed to achieve.  It has been more than a year that the oil supply in the world has been curtailed by the OPEC and other producers including Russia through production cuts which has helped the global price of oil rising somewhat.
But the output cuts by OPEC has bene offset by the rise in production of shell oil and gas in the U.S in recent months where the industry is producing more than v10 million barrels a day which is more than the production of the largest oil producer of the world – Saudi Arabia.
The forecast for non-OPEC production of oil was raised by OPEC for 2018 by 280,000 barrels a day compared to what it had predicted in last month's report. It estimates that this year, 1.66 million barrels a day more of oil would be pumped by non-OPEC oil producers which would increase the global oil supplies.
At the same time, OPEC forecast that there would be an increase in global demand for oil by 1.6 million barrels a day.
There will be robust economic development in developing nations like China, India and Brazil, says OPEC. However, investors could take away their money from these markets due to the U.S. Fed raising the interest rates which could be a damper for the developing economies where foreign investments have aided the economic growth and consequently demand for oil.
But OPEC remains relatively upbeat despite these concerns.
"Nevertheless, the current healthy momentum in the global economy, together with the efforts undertaken by the OPEC and non-OPEC oil producing countries under the Declaration of Cooperation, is supporting the rebalancing of the oil market fundamentals," it said.

Christopher J. Mitchell

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