Oil prices were flat on Wednesday morning, as changes in U.S. trade policy fueled uncertainty as markets assessed the potential impact of the U.S.-China trade war on economic growth and energy demand.

Brent crude futures rose 5 cents, or 0.1%, to $64.72 a barrel by 0039 GMT, while U.S. West Texas Intermediate crude futures rose 3 cents, or 0.1%, to $61.36. Both benchmarks fell 0.3% on Tuesday.

Global oil demand is expected to grow at its slowest rate in five years in 2025 and U.S. production growth is also set to ease, due to U.S. President Donald Trump's tariffs on trading partners and their retaliatory measures, the International Energy Agency said on Tuesday.

World oil demand is expected to rise by 730,000 barrels per day this year, the IEA said, down sharply from the 1.03 million barrels per day forecast last month. The cut was larger than the cut made on Monday by the Organization of the Petroleum Exporting Countries.

"As the IEA highlighted, demand growth is likely to remain moderate, and the imbalance between global crude supply and demand is weighing on the market," said Tetsu Emori, CEO of Emori Fund Management.

"If the stock market — currently under tariff pressure — bounces back, we could see an oil price rally that pushes WTI above $65. But without that support, prices are likely to remain in the $60s," he said.

Concerns over Trump's tariff escalation, combined with rising output from OPEC+, a grouping of OPEC and its producer allies such as Russia, have dragged oil prices down about 13% so far this month.

Uncertainty over trade tensions has prompted several banks, including UBS, BNP Paribas and HSBC, to cut their crude price forecasts. Trump has raised tariffs on Chinese goods to record levels, prompting Beijing to impose retaliatory duties on U.S. imports in an escalating trade war between the world's two largest economies that markets fear could lead to a global recession.

In a further sign of rising tensions, China has ordered its airlines not to accept any more Boeing (BA.N) shipments in response to the U.S. decision to impose 145% tariffs on Chinese goods, Bloomberg News reported on Tuesday. Meanwhile, U.S. crude stocks rose 2.4 million barrels in the week to April 11, while gasoline inventories fell 3 million barrels and distillate stocks fell 3.2 million barrels, market sources said, citing American Petroleum Institute figures on Tuesday. (Newsmaker23)

Source: Reuters