Oil prices fell on Wednesday, extending losses from the previous session, as investors weighed the International Energy Agency’s warning of a supply surplus in 2026 and US-China trade tensions that could curtail demand.

Brent crude futures fell 21 cents, or 0.3%, to $62.18 a barrel, while US West Texas Intermediate futures eased 16 cents, or 0.3%, to $58.54 a barrel.

Both contracts closed at five-month lows in the previous trading session.

The International Energy Agency said on Tuesday the global oil market could face a surplus next year of as much as 4 million barrels per day, a bigger glut than it earlier forecast, as OPEC+ producers and rivals raise output and demand remains sluggish.

“The market is focusing on excess supply amid mixed demand signals.

Ebbing geopolitical risks and escalating trade tensions are also adding further pressure on prices,“ said Emril Jamil, a senior oil analyst at LSEG.

The trade dispute between the United States and China, the world’s two largest oil consumers, has reignited in the past week, with both countries imposing additional port fees on ships carrying cargo between them.

That will raise trading costs and disrupt freight flows, likely lowering economic output.

“The focus will remain on the recent re-escalation in trade tensions between the US and China and the risks it brings to the global economy,” said Tony Sycamore, a market analyst at IG.

The tensions between the world’s two largest economies intensified after China last week announced a major expansion of rare earth export controls, and US President Donald Trump threatened to raise tariffs on Chinese goods to 100% and tighten software export curbs from November 1.