Oil prices extended losses on Wednesday as investors weighed a potential 2026 supply surplus and ongoing U.S.-China trade tensions that could suppress demand.

Brent crude futures fell 12 cents, or 0.19%, to $62.27 per barrel, while U.S. West Texas Intermediate (WTI) futures declined 10 cents, or 0.17%, to $58.60. Both benchmarks had closed at five-month lows in the previous session.

The International Energy Agency (IEA) warned that the global oil market could face a surplus of up to 4 million barrels per day in 2026, a higher estimate than previously projected, as OPEC+ producers and rivals increase output while demand growth remains sluggish.

Trade tensions added further pressure. The United States and China began imposing additional port fees on ocean carriers, and Beijing announced sanctions against five U.S.-linked subsidiaries of South Korean shipbuilder Hanwha Ocean. The conflict follows China’s expansion of rare earth export controls and President Trump’s threats to raise tariffs on Chinese goods to 100% and tighten software export restrictions from November 1.

Analyst Yang An of Haitong Futures noted, “Beyond U.S.-China trade relations and the progress of talks, the key for oil prices now is the degree of oversupply, reflected in changes in global inventories.”

Market participants are also awaiting weekly U.S. inventory data for clues on demand. Preliminary estimates suggest crude inventories rose by roughly 200,000 barrels in the week to October 10, while gasoline and distillate stocks likely declined. The American Petroleum Institute (API) report is expected at 4:30 p.m. EDT on Wednesday, with the Energy Information Administration (EIA) release scheduled for 10:30 a.m. EDT on Thursday, both delayed due to the Columbus Day/Indigenous Peoples’ Day holiday.

The combination of supply-side pressures and geopolitical tensions continues to weigh on oil markets, with traders closely monitoring both inventory reports and U.S.-China trade developments for further direction.