Global crude oil prices have witnessed a decline, with U.S. West Texas Intermediate (WTI) crude dropping 26 cents to $68.11 per barrel. This downward trend comes after reports that OPEC+ will proceed with its planned production increase in April, while markets remain cautious about the impact of U.S. tariffs on Canada, Mexico, and China.
Crude Oil Prices in the Global Market
- WTI crude oil fell by 0.4%, settling at $68.11 per barrel.
- Brent crude slipped by 3 cents, reaching $72.99 per barrel at 1142 GMT.
- WTI crude futures slightly increased by 3 cents, reaching $68.96 per barrel.
Why Are Oil Prices Dropping?
According to Darren Lim, a commodities strategist at Phillip Nova, the decline in oil prices is primarily driven by:
OPEC+ Decision – The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia (OPEC+), have decided to increase oil production by 138,000 barrels per day in April—the first increase since 2022. This move has sparked concerns over potential oversupply in the market.
U.S. Tariffs – The U.S. government’s plan to impose tariffs on Canada, Mexico, and China has further contributed to price fluctuations, raising fears of economic slowdowns affecting global oil demand.
Russia-Ukraine Conflict – The ongoing geopolitical uncertainty continues to impact oil markets, with potential peace negotiations influencing price movements.
Impact of Russia-Ukraine Conflict on Oil Markets
Oil prices have remained near two-month lows, with market sentiment affected by a potential peace agreement between Russia and Ukraine. However, a recent decline in U.S. crude stockpiles has provided some support to prices.
ING Commodities strategists have noted that:
- The possibility of a peace deal between Russia and Ukraine is improving.
- A minerals agreement between the U.S. and Ukraine could lead to the lifting of Russian sanctions, reducing supply uncertainties.
Reports suggest that the U.S. and Ukraine have agreed on the terms of a draft minerals deal, which could play a crucial role in U.S. President Donald Trump's efforts to resolve the Russia-Ukraine conflict.
U.S. Crude Stockpile Data and Market Predictions
Recent data from the American Petroleum Institute (API) shows that U.S. crude stockpiles dropped by 640,000 barrels during the week ending February 21. This marks the first decline in U.S. crude oil inventories since mid-January, a factor that could help stabilize prices.
- Reuters analysts had earlier predicted a 2.6 million barrel increase in crude inventories.
- Official U.S. stockpile figures from the Energy Information Administration (EIA) are expected later.
The Future of Crude Oil Prices
While economic concerns over President Trump’s tariffs on China and other trade partners have influenced oil prices, ANZ Bank analysts believe that these concerns have eased fears of short-term oil supply shortages, despite fresh U.S. sanctions on Iran.
With OPEC+ increasing production and geopolitical factors still at play, crude oil prices may continue to face fluctuations in the coming weeks.
