The prospect of a settlement to the trade differences between the world’s two biggest economies is seen as more unlikely due to the looming US election next year Daniel Yergin: Despite the supply-demand balance, gloom has settled over the oil market and this is responsible for pushing down the price ST. PETERSBURG: Middle East oil-exporting economies could be big losers from worsening global trade relations, leading analysts in energy and finance have told Arab News. Speaking on the sidelines of a session on trade at the St. Petersburg International Economic Forum in Russia, Daniel Yergin, the renowned oil historian and energy consultant, said the “titanic struggle” between the US and China could hit Arabian Gulf economies by reducing demand for oil just as global supply and demand were closer to balance. The prospect of a settlement to the trade differences between the world’s two biggest economies is seen as more unlikely due to the looming US election next year. “Despite the supply-demand balance, gloom has settled over the oil market and this is responsible for pushing down the price. It’s basically that the battle over trade between the US and China has really hit the oil price, as it has with other assets around the world,” Yergin said. “It’s about concern and worry and pessimism about what it means for global economic growth and therefore what it means for oil demand. That is the connection.” Yergin said he detected a change in sentiment toward oil producers. “This is not good news for Middle East oil exporters right now. The sentiment has changed. Negative sentiment has really turned to gloom and it’s basically because of worry about what seems to be a titanic struggle between the US and China. It’s gone beyond tariffs. “On the other hand both sides do have an interest in finding a solution over the coming months, but it gets more difficult because we’ll be in the middle of an US election campaign,” Yergin added. His comments were echoed by James McCormack, managing director and global head of sovereign and supranational business at Fitch Ratings, which assesses creditworthiness of countries and regions. “I think one thing to keep in mind was that we saw the run-up in oil prices from mid December until about a month ago, when the trade dispute looked like it was being resolved. Now we’re in a different part of the trade dispute where it looks like it’s not going to be resolved. Where have oil prices gone? They’ve come back down again quite aggressively,” he said. “When we consider the impact (of a serious trade dispute) — negative growth, higher inflation from tariffs, which means lower wage growth in the advanced economies — that kind of scenario does not bode well for energy prices or commodity prices,” he said.