Oil prices dip on tariffs worries as supply concerns boost outlook
Press Hub UCapital
Share:
Oil prices softened early Friday, reflecting renewed demand concerns triggered by the latest round of tariffs from the U.S. administration. Brent crude futures declined 0.4% to $73.72 a barrel, ending a seven-session winning streak, while U.S. West Texas Intermediate (WTI) was down by 0.5%, trading around $69.59 a barrel. Despite this morning’s pullback, both contracts are still on track for weekly gains of approximately 2%, driven primarily by tightening global supply conditions.
The key driver behind oil's recent rally has been heightened uncertainty surrounding Venezuelan and Iranian exports, intensified by new U.S. sanctions targeting potential buyers. President Trump’s announcement of fresh 25% tariffs directed at purchasers of Venezuelan crude has notably disrupted oil flows to China, historically a top importer. India's Reliance Industries, operator of the world's largest refining complex, has also decided to halt Venezuelan oil imports, exacerbating fears of supply shortages.
U.S. inventory data has provided additional support to the market, indicating a sharper-than-expected drawdown. According to the Energy Information Administration, American crude stocks fell by 3.3 million barrels in the week ended March 21, significantly surpassing analysts' expectations of a 956,000-barrel decline. This drop underscores robust domestic demand in the world’s leading oil-consuming nation.
However, broader market sentiment remains cautious, as the latest U.S. tariffs raise concerns of a potential global economic slowdown that could erode oil demand growth. While supply-side factors remain bullish, with analysts highlighting tightness due to geopolitical developments, persistent tariff uncertainties pose risks that could limit sustained price advances.
As such, despite recent upward momentum, industry forecasts remain prudent. Analysts at BMI continue to project Brent crude will average around $76 per barrel in 2025, down slightly from $80 in 2024, reflecting expectations of ongoing volatility amid global trade tensions. Traders should closely monitor geopolitical developments and inventory shifts, adjusting strategies to capture opportunities created by price volatility without losing sight of the underlying economic uncertainties.
The key driver behind oil's recent rally has been heightened uncertainty surrounding Venezuelan and Iranian exports, intensified by new U.S. sanctions targeting potential buyers. President Trump’s announcement of fresh 25% tariffs directed at purchasers of Venezuelan crude has notably disrupted oil flows to China, historically a top importer. India's Reliance Industries, operator of the world's largest refining complex, has also decided to halt Venezuelan oil imports, exacerbating fears of supply shortages.
U.S. inventory data has provided additional support to the market, indicating a sharper-than-expected drawdown. According to the Energy Information Administration, American crude stocks fell by 3.3 million barrels in the week ended March 21, significantly surpassing analysts' expectations of a 956,000-barrel decline. This drop underscores robust domestic demand in the world’s leading oil-consuming nation.
However, broader market sentiment remains cautious, as the latest U.S. tariffs raise concerns of a potential global economic slowdown that could erode oil demand growth. While supply-side factors remain bullish, with analysts highlighting tightness due to geopolitical developments, persistent tariff uncertainties pose risks that could limit sustained price advances.
As such, despite recent upward momentum, industry forecasts remain prudent. Analysts at BMI continue to project Brent crude will average around $76 per barrel in 2025, down slightly from $80 in 2024, reflecting expectations of ongoing volatility amid global trade tensions. Traders should closely monitor geopolitical developments and inventory shifts, adjusting strategies to capture opportunities created by price volatility without losing sight of the underlying economic uncertainties.