Crude Oil Prices Drop Due to US Tariffs and Slower Asian Demand

Crude oil prices are falling sharply following US President Donald Trump’s disruption of international trade. However, the impact of Trump’s tariffs also conceals some pre-existing weakness in demand, specifically the sluggish imports during the first quarter in Asia, which is the largest crude purchasing area globally.

According to data gathered by LSEG Oil Research, Asia's crude oil imports in the first quarter averaged 26.44 million barrels per day (bpd), a drop of 640,000 bpd from 27.08 million bpd during the same period in 2024.

The drop in imports stands in contrast to predictions from organizations like the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency that Asia will spearhead global oil demand growth by 2025.

A minor positive aspect of Asia’s sluggish first quarter imports is that they indicated some recovery in March. In March, the region brought in 27.39 million bpd, an increase from February's 25.44 million bpd and approximately consistent with last March's 27.33 million bpd, as stated by LSEG.

The recovery in March was driven by China, the largest crude importer globally, which experienced seaborne imports of 10.14 million bpd, the highest level in three months.

Various elements contribute, including refiners replenishing stocks post-scheduled maintenance and in anticipation of the seasonal increase in demand as winter in the Northern Hemisphere ends. However, the key factor was probably price, as most cargoes arriving in March were scheduled during a period when global crude prices were falling.