Oil Prices Decline on OPEC+ Output Expectations and Trade Concerns

Oil prices experienced a roughly 2% drop, reaching a two-week low on Tuesday. This decline was fueled by anticipations that OPEC+ might increase output, coupled with worries that President Trump’s trade policies could hinder global economic expansion and diminish the need for fuel.

Brent crude futures decreased by $1.41, a 2.1% fall, settling at $64.45 per barrel by 11:03 a.m. EDT (1503 GMT). Concurrently, U.S. West Texas Intermediate crude saw a drop of $1.36, or 2.2%, reaching $60.69.

These figures position both benchmarks to potentially achieve their lowest closing values since April 10.

President Trump’s endeavors to reshape international trade through import tariffs have elevated the likelihood of a global economic downturn this year, as indicated by a majority of economists surveyed by Reuters.

China, facing the most substantial tariffs, has countered with its own levies on U.S. imports, intensifying a trade conflict between the world’s two leading oil-consuming nations. This situation has led analysts to significantly revise downward their projections for oil demand and prices.

Analyst Quotes

“Ongoing trade negotiation challenges between China and the U.S. are reigniting worries about economic conditions and potential demand. There’s uncertainty about communication between the two countries’ leaders,” commented Tamas Varga, an analyst at PVM.

The U.S. trade deficit in goods expanded to a record level in March as businesses accelerated efforts to import merchandise ahead of Trump’s tariffs, suggesting trade significantly impeded economic growth in the first quarter.

Broader Economic Impact

Several major corporations, including General Motors, Kraft Heinz, and Electrolux, have adjusted or withdrawn their financial forecasts for 2025, indicating a widespread impact of Trump’s trade war on the corporate sector.

The White House announced that President Trump intends to sign an executive order to mitigate the effects of automotive tariffs.

Meanwhile, BP, a major UK oil company, reported a more substantial than anticipated 48% decline in net profit, falling to $1.4 billion due to weaker refining performance and gas trading activities.

The energy sector is closely monitoring upcoming earnings reports from U.S. oil giants Exxon Mobil and Chevron later in the week.

OPEC+ Production Considerations

Various members of OPEC+, which includes the Organization of the Petroleum Exporting Countries and its allies, are considering recommending a second consecutive monthly increase in output for June, as reported by sources last week.

Expert Opinions

“Another production increase from OPEC+ could be detrimental given the current weak market sentiment, particularly with Kazakhstan’s limited interest in reducing output,” stated Ole Hansen, an analyst at Saxo Bank.

Kazakhstan’s oil exports saw a 7% increase year-on-year in the January-March period, attributed to increased supply via the Caspian pipeline, according to calculations based on official data and sources.

U.S. Oil Inventories

Data on U.S. oil inventories from the American Petroleum Institute is expected on Tuesday, followed by data from the U.S. EIA on Wednesday.

Analysts predict that energy companies added approximately 0.5 million barrels of oil to U.S. stockpiles during the week ending April 25.

If this projection is accurate, it would represent the fifth consecutive weekly increase, contrasting with a 7.3 million barrel increase during the same week last year and an average build of 3.2 million barrels over the past five years (2020-2024).