Oil falls on OPEC+ supply hike, US tariff pressure
Shafaq News/ Oil prices extendedlosses on Tuesday following reports that OPEC+ will proceed with a plannedoutput increase in April while markets braced for U.S. tariffs on Canada,Mexico and China to take effect.
Brent futures fell 49 cents, or0.7%, to $71.13 a barrel at 0455 GMT, as U.S. West Texas Intermediate (WTI)crude eased 26 cents, or 0.4%, to $68.11.
"The current downward trend inoil prices is primarily driven by OPEC+'s decision to increase output and theintroduction of U.S. tariffs," said Darren Lim, commodities strategist atPhillip Nova.
A further complicating factor wasgeopolitical developments related to the Russia-Ukraine conflict, he added.
Trump's pause in all U.S. militaryaid to Ukraine followed his Oval Office clash with President VolodymyrZelenskiy last week.
The Organization of the PetroleumExporting Countries (OPEC) and allies like Russia, known as OPEC+, decided toproceed with a planned April oil output increase of 138,000 barrels per day,the group's first since 2022.
"While this decision aims togradually unwind previous output cuts, it has raised concerns about a potentialoversupply in the market," said Lim.
U.S. President Donald Trump's 25%tariffs on imports from Canada and Mexico are set to take effect at 12:01 a.m.EST (0501 GMT) on Tuesday with 10% tariffs for Canadian energy, while importson Chinese goods will increase to 20% from 10%.
Analysts expect the tariffs to weighon economic activity and fuel demand, putting downward pressure on oil prices.
"Market participants arestruggling to gauge the impact of the flood of energy-related policyannouncements made by the Trump administration this month," BMI analystswrote in a note.
"However, those weighing to thedownside, notably U.S. tariff measures, are currently winning out."
Further weighing on oil was Trump'shalt of military aid to Ukraine, as the market has viewed the growing distancebetween the White House and Ukraine as a sign of a potential easing of theconflict.
That in turn could lead to sanctionsrelief for Russia, with more oil supply returning to the market.
The pause followed a Reuters reportthat the White House has asked the State and Treasury departments to draft alist of sanctions that could be eased for U.S. officials to discuss duringtalks with Moscow, sources have said.
However, Goldman Sachs analysts sayRussia's oil flows are constrained more by its OPEC+ production target thansanctions, warning that an easing might not boost them significantly.
(REUTERS)
