Oil prices continued their decline on Tuesday following reports that OPEC+ plans to stick to its production increase plan for April, while markets brace for the impact of U.S. tariffs on Canada, Mexico, and China, as well as retaliatory tariffs from Beijing against Washington.
اضافة اعلان
Brent crude futures dropped by 57 cents, or 0.8%, to $71.05 per barrel by 06:50 GMT, while U.S. West Texas Intermediate (WTI) crude fell by 39 cents, or 0.6%, to $67.98.
Darren Lim, a commodities strategist at Phillip Nova, stated, “The current bearish trend in oil prices is mainly driven by OPEC+’s decision to increase production and U.S. tariffs.”
He added that the geopolitical developments related to the Russian-Ukrainian conflict are further complicating the situation.
U.S. President Donald Trump announced the halt of all military aid to Ukraine after his meeting with President Volodymyr Zelensky in the Oval Office last week.
The Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, decided to move forward with the planned oil production increase in April by 138,000 barrels per day, the first increase of its kind since 2022.
Lim noted, “Although this decision aims to gradually unwind previous production cuts, it has raised concerns about a potential market oversupply.”
U.S. tariffs came into effect on Tuesday, with Trump imposing a 25% tariff on imports from Canada and Mexico, alongside a 10% tariff on Canadian energy, while the tariffs on Chinese imports rose to 20% from 10%.
Analysts expect these tariffs to impact economic activity and fuel demand, putting pressure on oil prices.
Analysts at BMI stated in a note: “Market participants are struggling to estimate the impact of the slew of energy-related policy announcements made by the Trump administration this month,” adding, “Negative factors, particularly the U.S. tariff measures, are dominating the market right now.”
In response, China announced an increase of 10% to 15% on tariffs imposed on a range of U.S. agricultural and food products, along with placing 25 U.S. companies under export and investment restrictions.
Another factor affecting oil prices is Trump’s decision to halt military aid to Ukraine, which the market interpreted as a sign of a potential de-escalation in the conflict, possibly leading to the easing of sanctions on Russia and the return of more oil supplies to the market.
Reuters reported that the White House has asked the State and Treasury Departments to prepare a list of sanctions that could be eased for discussion with Moscow.
Tony Sycamore, an analyst at IG Markets, said, “The perfect storm for crude oil has intensified,” noting that “reports of the cessation of U.S. military aid to Ukraine are seen as paving the way for easing sanctions on Russian oil.”
He added, “This is happening at the same time that U.S. tariffs on Canada, Mexico, and China are coming into effect, raising fears of a trade war. Crude oil is not getting any relief right now.”
However, analysts at Goldman Sachs pointed out in a note on Monday that Russian oil flows are more constrained by OPEC+ production targets than sanctions, warning that easing restrictions may not lead to a significant increase in supply.
The bank also noted that higher-than-expected supply and weaker demand due to sluggish U.S. economic activity and escalating tariffs present downside risks to oil price forecasts. (Agencies)
