08:47 AM EDT, 04/11/2025 (MT Newswires) -- Oil prices edged down early on Friday as the trade war between the world's two largest economies intensified, threatening to slow global growth and weaken demand even as supply is on the rise.

West Texas Intermediate crude oil for May delivery was last seen down US$0.04 to US$60.03 per barrel, while June Brent crude was down US$0.03 to US$63.30 .

China on Friday hiked its tariff on U.S. imports to 125%, a day after U.S. President Donald Trump raised levies on Chinese goods to 145%. The trade battle comes as as Trump on Wednesday said he is pausing reciprocal tariffs on imports from most countries, causing short-lived stock-market euphoria before the escalating battle with China and as markets noticed punishing levies on other large U.S. trading partners remain in effect.

"Whilst the highest rates were paused for 90 days, the 10% blanket tariffs, together with the 25% measures on most Mexican and Canadian imports, on autos and steel and aluminium imports, remained in effect. Add to that the most important element of the trade war, the perpetual increase in Chinese import duties and vice versa and all of a sudden, the optics are much less attractive than the relentless equity march the day before yesterday insinuated," PVM Oil Associates, the world's No.1 oil broker, noted.

Trump's tariff wars threaten to slow global growth as trade flows are likely to falter, while inflation while rise threatening stagflation and cutting into oil demand. The Energy Information Administration (EIA) on Thursday cut its forecast for 2025 demand growth to 0.9-million barrels per day from 1.3 million.

"We assess that there could be less oil demand growth, and we have reduced our outlook for global oil demand accordingly. We now expect that global oil consumption will increase by 0.9 million barrels per day (b/d) in 2025 and 1.0 million b/d in 2026, 0.4 million b/d and 0.1 million b/d less than what we forecast ... However, because the recent updates to trade policy widen the range of possible GDP growth outcomes, this forecast is subject to significant uncertainty," the agency noted.

The weakening demand forecast comes as supply is on the rise, with OPEC+ still planning to add 411.000 barrels per day of new supply in May as it speeds the return of 2.2-million bpd of production cuts to market, even as supply from producers outside of the cartel is on the rise. The EIA said it now expects global inventories to begin climbing in the current quarter as production climbs while the trade wars cut into demand.

"We expect global oil inventories will increase by 0.6 million b/d in 2Q25 and by 0.7 million b/d on average in the second half of 2025, and inventories will continue to accumulate at that pace in 2026." it said.