Oil Prices Decline Amid Tariff Uncertainty and Rising OPEC+ Output
Oil prices dropped on Monday as concerns over the potential impact of US import tariffs on global economic growth and fuel demand weighed on investor sentiment.
Additionally, increasing output from OPEC+ producers added to worries about oversupply, further dampening market enthusiasm for riskier assets.
Brent crude was down by 31 cents, or 0.4%, at $70.05 a barrel by 0445 GMT, following a 90-cent increase on Friday. Meanwhile, US West Texas Intermediate (WTI) crude fell by 35 cents, or 0.5%, to $66.69 a barrel after rising 68 cents in the previous session.
This marks the seventh consecutive week of decline for WTI, the longest losing streak since November 2023. Brent, similarly, experienced its third straight week of losses. The downturn comes amid ongoing uncertainty surrounding the impact of tariffs imposed by US President Donald Trump. These tariffs, which initially targeted oil suppliers like Canada and Mexico, were followed by retaliatory measures from China and Canada, particularly in the form of agricultural tariffs.
ING analysts highlighted tariff uncertainty as a key factor contributing to the oil price weakness, while additional pressure has come from Saudi Arabia’s decision to reduce crude prices to Asia for the first time in three months and deflationary signals from China, which have negatively affected market sentiment.
Other market concerns include potential shifts in US policy toward Russia and OPEC+’s decision to increase output. There are also fears over the possible lifting of US sanctions on Russia, further complicating the oil market outlook. However, IG analyst Tony Sycamore suggested that much of the negative news is likely priced in and that WTI prices could find support around the $65-$62 range before potentially rebounding to $72.
On a more optimistic note, oil prices briefly rebounded on Friday after Trump threatened to impose additional sanctions on Russia if the country does not reach a ceasefire agreement with Ukraine. The US is also reportedly exploring ways to ease sanctions on Russia’s energy sector if the country agrees to end its war with Ukraine.
Meanwhile, OPEC+ countries, including Russia, have announced plans to increase oil output starting in April. Despite concerns about oversupply, Russia’s Deputy Prime Minister Alexander Novak indicated that OPEC+ could reconsider these output hikes if there is a market imbalance.
With input from Reuters and the Wall Street Journal.
