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An Iranian navy boat tries to control the fire on Norwegian-owned Front Altair tanker. Photo: Tasmin News/AFP/Getty Images

Two big forces are tugging on the global oil market: the weakening global economy and rising geopolitical tensions over tanker attacks in the Gulf of Oman.

Where it stands: The weakening economy is carrying a lot of weight despite the spike in tensions from the U.S. blaming Iran for yesterday's violence near the Strait of Hormuz, which is the world's biggest oil choke point.

  • Prices, which rose after the attacks, dipped Friday as the International Energy Agency cut its estimate for 2019 oil demand growth to 1.2 million barrels per day.
  • They've since recovered some ground but are still down overall this week.

Why it matters: The muted price response despite the tanker attacks is likely a sign of the faltering global economy.

  • "World trade growth has fallen back to its slowest pace since the financial crisis ten years ago," IEA noted in its closely watched monthly report.

What to watch: Whether the economic headwinds or the threat of more and wider conflict will hold more sway. RBC Capital Markets' Helima Croft summed up the competing forces in a CNBC interview yesterday.

  • The question this summer, she said, will be this: "What war is going to dominate the market? A trade war or a shooting war?”

What's next: Looking at 2020 for the first time, IEA sees demand growth recovering to 1.4 million barrels per day, "supported by solid non-OECD demand and petrochemicals expansion."

  • But there's more than enough barrels to meet it thanks to growth from the U.S., Brazil and elsewhere.
  • The report sees non-OPEC supply rising 2.3 million barrels per day in 2020.

But, but, but: Demand growth would be lower if U.S.-China trade battles worsen.

What they're saying: "A clear message from our first look at 2020 is that there is plenty of non-OPEC supply growth available to meet any likely level of demand, assuming no major geopolitical shock," IEA said.

  • They call this "welcome news" for consumers and the vulnerable global economy, "as it will limit significant upward pressure on oil prices."

Winners and losers: As Bloomberg notes, the report underscores OPEC's struggles. IEA sees demand for OPEC's crude falling to 29.3 million barrels daily next year, which is 650,000 barrels below May's output.

Go deeper: U.S. releases video claimed to depict Iran removing mine from targeted oil tanker

Go deeper

29 mins ago - Politics & Policy

Trump leaves White House for the final time

President Trump took off on Marine One at 8:17 a.m on Wednesday morning, departing the White House for the last time, en route to Florida.

The big picture: Trump's final hours will be marked by snubbing his successor and granting pardons to many of his allies who have been swept up in corruption scandals.

Inauguration Day dashboard

Screenshot: Fox News

President Trump has left the White House en route to a farewell event at Andrews Air Force Base, kicking off the day that will culminate with President-elect Joe Biden taking office.

What's next: The inaugural celebration for young Americans is being livestreamed, starting at 10am.

Dion Rabouin, author of Markets
1 hour ago - Economy & Business

Janet Yellen said all the right things to reassure the markets

Illustration: Aïda Amer/Axios

Treasury Secretary nominee and former Fed chair Janet Yellen's confirmation hearing before the Senate Finance Committee on Tuesday showed markets just what they can expect from the administration of President-elect Joe Biden: more of what they got under President Trump — at least for now.

What it means: Investors and big companies reaped the benefits of ultralow U.S. interest rates and low taxes for most of Trump's term as well as significant increases in government spending, even before the coronavirus pandemic.