Oil prices dropped significantly due to escalating trade tensions between the United States and China, fueled by new sanctions and export controls, raising concerns about the global economy and oil demand.

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

A long-anticipated oil surplus is finally starting to emerge and is likely to depress prices, some of the world’s top commodity traders said.