Oil prices continue to face headwinds amid tariff-driven slowdown: IMF

US trade policies have had a more modest impact on the global economy than initially feared, but tepid global oil-demand growth and growing oil supplies are still expected to weigh on oil prices, the International Monetary Fund said Oct. 14 in its World Economic Outlook.

US futures markets indicate oil prices will average $68.90/b in 2025, a 12.9% decline from 2024, before dropping to $65.80/b in 2026 and gradually recovering to $67.30/b through 2030, the outlook said.

Oil prices have already declined 5.4% between March and August 2025, with crude prices rangebound between $60/b and $70/b since US tariff announcements in early April, the outlook said.

At 1713 GMT, NYMEX November WTI was down 74 cents at $58.75/b, and ICE December Brent traded 88 cents lower at $62.44/b.

"The tariff announcements induced a decrease in global demand expectations and coincided with the start of an accelerated production schedule from OPEC+," the outlook said.

The International Energy Agency is forecasting just 700,000 b/d of global demand growth in 2025, compared with 1.4 million b/d of non-OPEC+ supply growth, the outlook said.

The IMF noted that higher-cost producers are setting a loose price floor, with some US breakeven prices in the low to mid-$60s range.

Tariff shock

IMF Chief Economist Pierre-Olivier Gourinchas emphasized during an Oct. 14 press briefing that while the economic impact of tariffs has been more modest than initially expected, the effects on the global economy are still tangible.

"The tariff shock itself is smaller than initially feared, with many trade deals and exemptions," Gourinchas said.

Most countries also refrained from tariff retaliation, keeping the trading system open, Gourinchas said. Loose financial conditions and artificial intelligence-driven investments also helped to counter the impact of tariffs, he said.

"Yet despite all these offsets, the tariff shock is here, and it is further dimming already weak growth prospects," Gourinchas said.

The IMF projects global economic growth will slow to 3.2 % in 2025, down from 3.3% in 2024. This is a change from the outlook released in April, at the start of the trade policy shifts, when the IMF projected that 2025 global economic growth would slow to 2.8%, down from the January expectation of 3.3%.

While AI investment has helped to mitigate the economic impact of tariffs, it could also be a risk factor in the global economy, Gourinchas said. Market optimism about AI is pushing up stock valuations, echoing the dot-com boom of the late 1990s, he said.

"Whether this will be followed by a market correction, I don't think anyone can tell for sure, but part of our job is to be looking out for potential risk," Gourinchas said.