Crude oil prices have dropped by nearly 2%, reaching their lowest level in two weeks. This decline is primarily attributed to the growing concerns over the impact of China’s new AI model, DeepSec, on global energy demand. The drop in prices is also influenced by several economic and geopolitical factors, including economic data from China, US President Donald Trump’s proposed tariff policies, and OPEC’s response to these pressures.

AI and Energy Demand: A New Concern

News of China’s DeepSec AI model made waves recently, raising concerns about its potential impact on energy consumption. The DeepSec model, which has rapidly gained popularity, outperformed its US counterpart, ChatGPT, by becoming the most downloaded free app on Apple’s US App Store. This development has led investors to question whether AI technologies, particularly energy-intensive data centers, will require as much energy as initially anticipated. Analysts from Jefferies Investment Bank have pointed out that the low energy consumption of the DeepSec model might significantly alter predictions about energy demand, especially in the US, where AI was expected to account for up to 75% of energy consumption between 2030 and 2035.

Geopolitical Pressures and OPEC’s Response

The ongoing geopolitical tensions also continue to impact the oil market. President Trump has recently put pressure on OPEC to reduce oil prices, hoping that lower energy costs could aid in resolving the Russia-Ukraine conflict. However, OPEC and its allies, including Russia, have not yet responded to Trump’s demands. According to OPEC+ representatives, plans to increase oil production are set to begin in April.

Trump’s Trade Policies and Global Oil Prices

Trump’s trade policies have also contributed to the volatility of global oil prices. His recent actions have sparked fears of a global trade war, which could negatively affect both economic growth and energy demand worldwide. Additionally, the US’s threat to impose sanctions on Colombia, one of its key oil suppliers, added another layer of uncertainty. While the US later withdrew its threat, Colombia’s oil exports, which account for 41% of its production, will continue to flow into the US market, further influencing oil prices.

As the global economy faces these interconnected challenges, the oil market remains in flux, with price fluctuations expected as geopolitical and technological developments unfold. Investors and analysts are closely watching these evolving factors to gauge their impact on the energy market.