The OPEC cartel on Wednesday cautioned that global trade tensions could have a negative impact on the oil market by reducing the demand for crude.
In its monthly report, the Organization of the Petroleum Exporting Countries said buoyant world trade in 2017 and 2018 had helped impulse economic growth, and therefore demand for crude.
But this may change further down the line, OPEC said, as the United States and China fired the latest shots in their escalating trade war.
Washington on Tuesday threatened to impose new tariffs on another $200 billion in Chinese goods and Beijing vowed to retaliate.
The latest moves in the trade war between the world’s top two economies came just after tit-for-tat duties on $34 billion in goods came into effect.
According to OPEC, “the re-emergence of global trade barriers has thus far only had a minor impact on the global economy”.
However, “if trade tensions rise further, and given other uncertainties, it could weigh on business and consumer sentiment,” the report warned.
“This may then start to negatively impact investment, capital flows and consumer spending, with a subsequent negative effect on the global oil market.”
OPEC’s latest report comes after the cartel and non-member Russia pledged to boost oil production in a meeting in Vienna last month.
The agreement to hike output came after the price of crude soared earlier this year, hitting $80 per barrel in May.
According to the report, which cites secondary sources, OPEC crude production stood at an average of 32.33 million barrels per day in June, an increase of 173,000 barrels per day over the previous month.
“Crude oil output increased mostly in Saudi Arabia, Iraq, Nigeria, Kuwait and UAE, while production showed declines in Libya, Venezuela and Angola,” the report said.
Following the OPEC meeting, US President Donald Trump on July 1 said King Salman of oil kingpin Saudi Arabia had agreed to a request to ramp up crude production.
The official Saudi Press Agency confirmed a phone call between the two leaders about oil, but mentioned no specifics.
“Prices too high! He has agreed!” Trump tweeted at the time.