Oil fell slightly amid OPEC news and Trump’s tariffs
4 March 12:25
Oil prices declined slightly on Tuesday amid reports that OPEC will implement the planned production increase in April, as well as due to the entry into force of US duties on imports from Canada, Mexico and China, which provoked retaliatory measures by Beijing , "Komersant Ukrainian" reports citing Reuters.
Futures for Brent crude oil fell by $1.05, or 1.5%, to $70.57 per barrel by 11:24 Kyiv time. The price of WTI fell 86 cents, or 1.3%, to $67.51 per barrel.
Market factors
“The current downward trend in oil prices is primarily due to OPEC’s decision to increase production and the introduction of US duties,”
– said Phillip Nova commodities strategist Darren Lim.
Another factor weighing on the market was US President Donald Trump’ s decision to suspend all military aid to Ukraine after his conflict with President Volodymyr Zelenskyy at the White House last week.
On Monday, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC, confirmed their intention to increase oil production by 138 thousand barrels per day in April, the first increase since 2022.
“This decision came as a surprise to the market. The change in OPEC’s strategy looks like a policy priority over prices. This is probably due to the negotiations of Donald Trump, who called for lower oil prices,”
– said Bjarne Scheldrop, Chief Commodity Analyst at SEB.
US duties on imports from Canada and Mexico in the amount of 25% came into effect on Tuesday, including a 10% duty on Canadian energy products. At the same time, tariffs on Chinese imports increased from 10% to 20%.
Analysts predict that such measures will have a negative impact on economic activity and energy demand, which will put pressure on oil prices.
In response to these actions, China promptly announced a 10-15% increase in import duties on U.S. agricultural and food products and imposed export and investment restrictions on 25 U.S. companies.
Trump’s decision to suspend military aid to Ukraine put additional pressure on the market. Some experts believe that this may indicate a possible easing of US sanctions against Russia, which will help bring more Russian oil back to the market.
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“The perfect storm for the oil market is getting worse. The announcement of the suspension of military aid to Ukraine is perceived as a harbinger of a possible lifting of sanctions on Russian oil,”
– said IG analyst Tony Sycamore.
“This comes at the same time as US tariffs on imports from Canada, Mexico and China come into effect, raising fears of a trade war. The oil market is currently under considerable pressure,”
– he added.
However, Goldman Sachs notes that Russian oil flows are more limited by OPEC quotas than by sanctions, and the easing of restrictions may not have a significant impact on the market.
Analysts also warn of the risks of lower prices due to higher-than-expected production and lower demand amid a slowdown in US economic activity and escalating trade disputes.
In addition, demand in China is declining due to the period of maintenance of refineries, said Josh Callahan, head of oil derivatives at Arrow Energy Markets.
