Oil prices experienced a decline on Monday as market concerns over U.S. import tariffs weighed heavily on global economic growth. Investors also grew wary of rising output from OPEC+ producers, contributing to weaker demand for riskier assets.
By 0445 GMT, Brent crude fell by 31 cents, or 0.4%, to $70.05 per barrel, following a modest increase of 90 cents on Friday. Meanwhile, U.S. West Texas Intermediate (WTI) crude dropped 35 cents, or 0.5%, to $66.69 per barrel after closing 68 cents higher in the prior session.
WTI has now posted seven consecutive weeks of losses, marking its longest losing streak since November 2023. Similarly, Brent crude has fallen for three consecutive weeks. This decline follows the imposition and subsequent delay of U.S. tariffs on key oil suppliers, Canada and Mexico. Additionally, President Donald Trump raised taxes on Chinese goods, prompting China to retaliate with tariffs on U.S. agricultural products.
According to ING analysts, the uncertainty surrounding tariffs is a significant factor driving oil price weakness. The analysts also pointed out that recent oil price cuts from Saudi Arabia and deflationary signals from China have further dampened market sentiment.
Tony Sycamore, an analyst at IG, also highlighted concerns about U.S. economic growth and the potential lifting of U.S. sanctions on Russia. Furthermore, he mentioned that OPEC+ plans to increase oil output, which adds pressure to the market.
Despite these challenges, some analysts remain optimistic. Sycamore expects oil prices to find support between $65 and $62 per barrel. He believes that after this support level holds, prices could recover to $72 per barrel in the near future.
The U.S. saw some relief in oil prices on Friday after President Trump stated that the U.S. would increase sanctions on Russia if it failed to reach a ceasefire with Ukraine. At the same time, the U.S. government is exploring ways to ease sanctions on Russia’s energy sector if the country agrees to end its war with Ukraine.
Meanwhile, OPEC+ announced plans to increase oil output from April, despite market imbalances. Russia’s Deputy Prime Minister, Alexander Novak, suggested that OPEC+ could reverse this decision if the market becomes too unbalanced.
Adding to global supply concerns, Saudi Arabia decided to cut prices for crude grades sold to Asia for the first time in three months, effective in April. This move follows President Trump’s remarks last week about negotiating a deal with Iran to prevent the country from pursuing nuclear weapons. However, Iran has denied any intentions of seeking such weapons.
Trump’s “maximum pressure” campaign against Iran has intensified, with the U.S. revoking a waiver allowing Iraq to pay Iran for electricity. In response, Iran’s Supreme Leader, Ayatollah Ali Khamenei, stated that the country would not be bullied into negotiations.
In summary, concerns over U.S. tariffs, OPEC+ output increases, and geopolitical tensions continue to impact oil prices. The global market remains highly sensitive to these factors, and many analysts anticipate ongoing fluctuations in the near term.