Oil Drops as U.S Plans to Impose Tariffs on Venezuela Crude Buyers
Prices of crude oil dropped on Thursday as market weighed U.S moves to impose higher tariffs on countries buying crude from Venezuela. Brent crude, decreased by around 0.8% trading at $72.66 per barrel, down from $73.29 at the previous session’s close.
The US benchmark, West Texas Intermediate (WTI) fell by about 0.9%, settling at $69.12 per barrel, compared to its prior session close of $69.76. U.S President Donald Trump announced plans to impose a 25% tariff on countries purchasing oil or gas from Venezuela starting April 2.
Venezuela’s oil exports remain a key pillar of its economy, with China serving as its largest buyer. He also announced a 25% tariff on all imported automobiles and spare parts. Market participants remain cautious about the broader economic impact of these measures, as higher vehicle prices could suppress car sales and reduce manufacturing activity—potentially leading to lower fuel demand.
Meanwhile, developments surrounding the tariffs have also increased uncertainty regarding the Fed’s next steps. Chicago Fed President Austan Goolsbee stated that the next interest rate cut may be delayed due to economic uncertainty.
Minneapolis Fed President Neel Kashkari expressed uncertainty about the tariffs’ impact on the US economy, noting that while they could drive up prices—supporting the case for higher interest rates—they might also slow economic growth, warranting lower borrowing costs.
Kashkari indicated that the Fed may need to maintain its current monetary policy stance for an extended period until the economic outlook becomes clearer. Analysts note that higher interest rates could exert additional pressure on oil prices in the coming months.
Data suggesting increased oil production in the US, the world’s largest oil-consuming country, also contributed to downward price movements by easing market participants’ supply concerns.
The US Energy Information Administration reported that crude oil production in the country rose by 1,000 barrels per day (bpd) to approximately 13.57 million bpd during the week ending March 21.
US commercial crude oil inventories decreased by 0.8% during the week ending March 21, according to data released by the Energy Information Administration (EIA) late Wednesday.
Inventories fell by approximately 3.3 million barrels to 433.6 million barrels, contrary to market expectations of a 1.5 million-barrel increase. Strategic petroleum reserves, which are excluded from commercial crude stocks, increased by 300,000 barrels to 396.1 million barrels, the data showed.
Over the same period, gasoline inventories decreased by around 1.4 million barrels to 239.1 million barrels. EIA data showed that US crude oil production increased by 1,000 barrels per day (bpd) to about 13.57 million bpd during the week ending March 21.
US crude oil imports rose by 810,000 bpd to approximately 6.2 million bpd, while exports fell by 35,000 bpd to around 4.61 million bpd over the same period. In the Short-Term Energy Outlook (STEO) released on March 11, the EIA predicted that crude oil output in the country would reach an average of 13.61 million bpd in 2025. FCMB Climbs as Investors Await Audited Results
