Oil prices plummeted by 2% to a 12-week low on Monday, with Brent futures falling $1.19 or 1.6% to settle at $71.62 a barrel and US West Texas Intermediate (WTI) crude dropping $1.39 or 2.0% to reach $68.37. The decline is attributed to concerns over OPEC+’s planned oil output increase in April, which could potentially upset the global energy market.
The Organization of the Petroleum Exporting Countries (OPEC+) has been cutting output by 5.85 million barrels per day since 2022 to support the market. However, with this decision set to be reversed in April, worries about oil demand and economic growth are dominating sentiment.
Meanwhile, US President Donald Trump is drawing up a plan that could give Russia sanctions relief, amidst ongoing tensions in Ukraine. This move has sparked concerns among analysts who believe it may undermine global efforts to counter Russian aggression.
On the trade front, Trump will impose 25% tariffs on Canadian energy products and 10% on other imports from Canada and Mexico starting Tuesday. In response, China is preparing countermeasures to US tariffs targeting its agriculture sector.
The decline in oil prices has also raised inflation worries at the US Federal Reserve, potentially leading to a slower economic growth rate and decreased energy demand. Speculators have cut their net long US crude futures and options positions to their lowest level since December 2023.
As the global economy navigates these complexities, one thing is clear: oil prices are under siege on multiple fronts, making them vulnerable to any further bearish headlines or economic data.
Source: https://www.reuters.com/business/energy/oil-recovers-upbeat-chinese-manufacturing-data-increases-some-optimism-2025-03-03