Oil and the US-China Trade War

Energy Intelligence’s World Energy Opinion
5 December 2018

At a dinner meeting at the conclusion of the G20 Summit in Buenos Aires on Dec. 1, Chinese President Xi Jinping and US President Donald Trump agreed to a truce in the trade war between their countries. Their deal provides a temporary reprieve for the global economy, and by extension oil demand, but the longer-term picture depends heavily on what the motivations of the Trump administration are. If Trump only wants to level the economic playing field between China and the US, there is hope for a permanent trade deal between the world’s two economic heavyweights, possibly in the next year or two. If the goal of the Trump administration is to pre-empt the rise of a rival superpower, the trade war would become an ongoing fixture of the international order. For the oil market, the differences between these two scenarios are stark, essentially the alternatives are a world of continued moderate oil demand growth or one of near stagnation.

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