OPEC+ Plan, Tariffs Threats Weigh on Oil Prices
Oil prices continue to face multiple pressures coming from both demand and supply sides with the U.S President Donald Trump influencing energy costs directions.
Brent price hovered around $70 per barrel on Monday while US West Texas Intermediate settle at $67 per barrel at the same time amidst negative outlook on supply and demand.
After posting weekly loss, the crude oil market pressures extended with concerns over U.S. import tariffs and their impact on global economic growth and fuel demand weighed on market sentiment.
Tariffs imposed and delayed by President Trump on key oil suppliers, such as Canada and Mexico, combined with China’s retaliatory measures, raised fears of a global economic slowdown.
This uncertainty has added downward pressure on crude prices, as slower growth and reduced demand are expected to dampen market activity, said Joseph Dahrieh, Managing Principal at Tickmill.
Dahrieh said the short-term outlook remains bearish, with tariff-related risks continuing to affect the oil market sentiment. However, a potential resolution could provide some support.
Saudi Arabia’s decision to cut crude prices for Asia and deflationary data from China have further intensified the negative sentiment. The price cuts are seen as an attempt to maintain market share due to growing supply and weaker demand.
These actions have heightened fears of a prolonged market downturn. Further downward pressure on prices in the near term could materialize, as both demand uncertainties and supply-side adjustments contribute to near-term bearish sentiment.
Meanwhile, OPEC+’s decision to increase oil output from April adds to supply concerns, potentially exacerbating the market imbalance. Whilst the output increase could indicate confidence in future demand recovery, it risks oversupply in the face of global economic uncertainty.
As a result, the market is likely to remain under pressure, with any recovery dependent on clearer indications of stronger demand.
The oil rig count in the US remained unchanged this week, oilfield services company Baker Hughes data showed Friday. The number of oil rigs, an indicator of short-term production in the country, remained flat at 486 for the week ending March 7.
The number of US oil rigs fell by 18 compared to one year ago. The price of international benchmark Brent crude stood at $70.36 per barrel at Friday’s trading close, while American benchmark West Texas Intermediate (WTI) was at $67.04 a barrel.
In a related development, Russia has reaffirmed its willingness to supply oil and gas to Indonesia, according to Russian Ambassador to Indonesia Sergei Gennadievich Tolchenov.
‘We are ready to be one of the suppliers of oil and gas, for example, LNG (liquified natural gas) and crude oil to Indonesia,’ the envoy told The Jakarta Post on Friday.
Additionally, Russia is committed to continuing discussions on an oil refinery project in East Java that had been stalled.
In addition to oil and gas, Moscow is ready to ‘start negotiations tomorrow’ with Jakarta if Indonesia is interested in constructing a nuclear power plant to support President Prabowo Subianto’s goal of energy self-sufficiency for the country, Tolchenov added.
As part of the energy cooperation between the two countries, he reiterated that Russia is still collaborating with Indonesia on an ‘oil refinery and petrochemical complex’ in Tuban, East Java.
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