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Crude Oil prices experienced a decline for the third consecutive session on Wednesday, as concerns arose regarding OPEC+ intentions to implement output increases in April, coupled with escalating trade tensions due to tariffs imposed by US President Donald Trump on Canada, China, and Mexico.
Brent crude futures decreased by 45 cents, or 0.63 percent, reaching $70.59 per barrel at 0953 GMT. Meanwhile, US West Texas Intermediate (WTI) crude fell by 74 cents, or 1.08 percent, settling at $67.52 per barrel.
In the prior session, these contracts closed near multi-month lows, influenced by the anticipation that US tariffs and the retaliatory measures from the affected nations would hinder economic growth and diminish fuel demand.
Ashley Kelty, an analyst at Panmure Liberum, commented, “The introduction of tariffs on China, Canada, and Mexico by the US prompted immediate retaliatory actions from these countries, raising concerns about a potential slowdown in economic growth and its subsequent effect on energy demand.”
On Tuesday, both Canada and China swiftly responded to Trump’s tariffs, while Mexican President Claudia Sheinbaum indicated that her country would also retaliate, although specifics were not provided.
The Organization of the Petroleum Exporting Countries and its allies, collectively referred to as Opec+, announced on Monday their decision to increase oil production for the first time since 2022, thereby exerting additional pressure on crude oil prices. The group plans to implement a modest increase of 138,000 barrels per day starting in April, marking the initial phase of a series of monthly increments aimed at reversing nearly 6 million barrels per day of production cuts, which represent close to 6 percent of global demand.
UBS analyst Giovanni Staunovo noted that there is some apprehension in the market regarding the Opec+ decision, as it may signal the beginning of a trend toward more frequent monthly supply increases. However, he emphasized that Opec+ has reiterated its commitment to restoring production only if the market can accommodate the additional barrels.
Analysts from Morgan Stanley Research suggested that Opec+ might opt for only a limited number of monthly increases rather than completely reversing the production cuts.
Additionally, the Trump administration announced on Tuesday the termination of a license that has allowed US oil producer Chevron to operate in Venezuela and export oil since 2022. This decision jeopardizes 200,000 barrels per day of supply, according to a note from ING commodities strategists.
In related news, US crude inventories decreased by 1.46 million barrels for the week ending February 28, as reported by market sources referencing figures from the American Petroleum Institute on Tuesday. Investors are now awaiting government data on US stockpiles, which is expected to be released on Wednesday.
