Oil falls more than 2% on US-China trade tensions and IEA report

Oil prices fell by more than 2% on Tuesday as the International Energy Agency warned of a huge supply glut in 2026, and as trade tensionspersisted between the U.S. and China, the world's two biggest economies.

Brent crude futures fell $1.38, or 2.2%, to $61.94 a barrel by 11:47 a.m. ET (15:47 GMT), while U.S. West Texas Intermediate crude was down 2.1%, or $1.24, at $58.27. Both contracts were at a five-month low.

In the previous session, Brent settled 0.9% higher, and U.S. WTI closed up 1%.

"The latest tensions between the U.S. and China will also be a pressure point on crude as China’s economy could be in question if tensions stay elevated," said Dennis Kissler, senior vice president of trading at BOK Financial.

UBS analyst Giovanni Staunovo said a risk-off mood had taken hold as trade tensions weigh on sentiment and the IEA report was bearish.

U.S. Treasury Secretary Scott Bessent said on Monday that President Donald Trumpremained committed to meeting Chinese President Xi Jinping in South Korea this month, as both countries try to defuse tensions over tariff threats and export controls.