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OPEC has revised its forecast for global oil demand growth in 2025, citing escalating trade tensions and weaker-than-expected economic indicators. The new forecast calls for an increase of 1.3 million barrels per day, 150,000 barrels less than previously estimated. Similarly, the IEA has lowered its forecast by 300,000 bpd.
Against this backdrop, oil prices will likely remain under pressure unless there is a major trigger, such as an escalation of tensions in the Middle East (which also could boost XAUUSD). This could be good news for large energy consumers, such as airlines, which could benefit from cheaper fuel and see their profits rise.
But will this translate into more orders for Boeing airplanes?
High oil prices have traditionally been a compelling argument for selling more fuel-efficient aircraft. However, the urgency to upgrade fleets often fades when energy costs fall. That was the exact reason why, in 2015, Goldman Sachs analyst Noah Poponak downgraded Boeing from “neutral” to “sell.”
Adding fuel to the fire, more economists and fund managers are sounding the alarm about a possible U.S. recession, especially in light of renewed trade tensions under Trump. If the economy suffers, demand for air travel would likely decline, giving airlines little reason to invest in new or upgraded fleets.
And the risks for Boeing don’t end there. In addition to the company’s ongoing safety and production issues, although those concerns have not yet gone away, rising geopolitical tensions between the U.S. and China are starting to put pressure on Boeing, as suggested by the fading mood in the companies’ shares.
On April 12, China raised tariffs on U.S. goods to 125%. U.S. exports — including Boeing aircraft — are virtually excluded from the Chinese market at these levels. To make matters worse, China ordered the suspension of purchases of Boeing aircraft and all orders for U.S.-made aviation equipment and parts.
After the news broke, Boeing shares fell pre-market despite green S&P 500 futures. Not surprisingly, about 10% of Boeing’s revenue comes from selling aircraft to China. Losing that market could cost the company about $5 billion a year. It won’t bankrupt Boeing, but it’s a major blow to a company already facing difficulties.
To make things worse, if U.S.-EU trade talks break down, Europe might hit Boeing with its own tariffs. That means Boeing’s stock largely depends on how the tariff situation unfolds. If Trump reaches a deal with Xi Jinping, investor confidence could bounce back. If not, the market will likely react accordingly.
