Brent at $50, LNG at $7, 4 mt aluminium demand lost—Tariff tensions could reshape energy and metal markets
Global trade tensions
could significantly impact energy markets with oil demand varying by up to 6.9 million barrels per day (b/d) by 2030, depending on the severity of tariffs and geopolitical conditions, Wood Mackenzie said in a report.
The energy consultancy outlined three scenarios—Trade Truce, Trade Tensions and Trade War—in its latest report titled Trading cases: Tariff scenarios for taxing times. These scenarios examine the potential outcomes for global GDP, oil and gas prices, metals demand and power sector investments.
'In the Trade Truce scenario, oil demand reaches 108 million b/d by 2030, with Brent averaging US$74/bbl,' the report said. Under the
Trade War scenario
, oil demand declines after 2026 and Brent crude drops to US$50/bbl.
Alan Gelder, Senior Vice President, Refining, Chemicals and Oil Markets at Wood Mackenzie, said, 'Falling oil demand results in the global composite gross refining margin collapsing to break-even levels, creating pressure for the rationalisation of weaker sites, particularly in Europe.'
In the global LNG market, the Trade War scenario could intensify the projected oversupply.
LNG prices
are projected to fall from US$11.2/mmbtu in 2024 to US$7.2/mmbtu by 2030 in the Trade Truce case. Prices may fall further under a Trade War due to reduced Chinese demand and tariffs diverting US cargoes.
'Although tariffs pose downside risks to global LNG supply, it is possible there will be more investments in US LNG,' said Massimo Di Odoardo, Vice President of Gas and LNG Research.
The power sector could also be adversely affected by trade uncertainty, particularly in the development of battery storage and renewable technologies. 'Unpredictable project costs are disrupting long-term strategies, particularly in battery storage due to China's supply chain dominance,' said Chris Seiple, Vice Chairman, Power and Renewables.
For metals and mining, aluminium demand may decline by nearly 4 million tonnes and copper by 1.2 million tonnes in 2026 under the Trade War scenario, the report noted.
Julian Kettle, Vice Chair, Metals and Mining at Wood Mackenzie, said, 'Even in a Trade Truce scenario, we foresee supply issues, while a tariff war could wipe out all projected growth through 2026.'
The report concludes that despite recent trade agreements, significant risks remain. Gavin Thompson, Vice Chairman, Energy, Wood Mackenzie, said, 'Lower economic growth will curb energy demand, prices and investment, while higher import prices will raise costs in sectors from battery storage to LNG.'
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Indian Express
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