Apr 04, 2025 (MarketLine via COMTEX) --
There was a notable fall in crude oil prices overall during the week after the US imposed hefty import tariffs on most countries in line with their respective trade deficits. This stoked recession worries globally and impacted commodity prices and equity indices around the world. Prices were also weighed down by signs of surplus crude in global markets after the OPEC+ announced higher than expected hike in its aggregate crude oil production for next month. The group also reiterated its members over the importance of attaining full compliance to these targets, indicating its eagerness to retain global market share in crude oil supply.
Some key factors that led to changes in crude oil prices this week are as follows:
Oil prices rose on Monday, supported by signs of improving manufacturing and services growth in China that could bode well for energy demand from this prominent market. As per China’s National Bureau of Statistics (NBS), the manufacturing Purchasing Managers’ Index (PMI) hit its highest level in a year at 50.5 in March 2025. Even the country’s non-manufacturing PMI expanded to 50.8 last month from 50.5 in February 2025, indicating a recovery in commercial activity in China. Prices also received support from the prevailing tightness in crude oil supplies from different producers, including the Kurdistan Autonomous region of Iraq, which has halted exports via the Iraq-Turkey pipeline nearly for the last two years. Fresh discussions to restart crude oil exports from this region reached another roadblock over revenue share.
Oil prices dipped on Tuesday, weighed down in anticipation of the likely announcement of new US tariffs and its probable impact on global trade. A slowdown in trade could adversely affect the demand for crude oil in global markets. However, the fall in prices was largely cushioned by the US threat of imposing secondary tariffs on Russian and Iranian energy exports, which has the potential to disrupt global crude supplies. During the ongoing discussions over ending the Ukraine conflict, the US indicated the possibility of imposing tariffs on buyers of Russian crude oil if the negotiations went downhill. Similarly, the country pressured Iran to restart discussions over a nuclear deal and left room for more sanctions and even military action if the latter failed to do so.
Oil prices rose again on Wednesday, supported by a likely decline in crude supplies from the key Russian port of Novorossiysk due to enforced suspension of operations for presumed safety violations. This includes the closure of crude oil loadings from two out of three moorings of the Caspian Pipeline Consortium (CPC) that exports Kazakh crude as well as one additional mooring at the port until all safety measures are put in place. However, the upside to prices was restricted largely from concerns over a global trade war after the US imposed at least 10% tariffs on most goods imported into the country. Although, oil and gas were excluded from these new tariffs, it still raised demand concerns due to the possibility of a slowdown in end use industries, including manufacturing.
Oil prices dropped last Thursday and Friday, weighed down by growing likelihood of a global recession from reciprocal tariffs announced by the US on most of its trading partners. It raised fears of a potential rift between the US and these partners, along with a possible spike in inflation that could weigh on economic activity and erode energy demand from global markets. Prices also came under pressure from a large weekly build in the US crude stockpiles. According to the US Energy Information Administration (EIA), crude inventory in the country shot up by 6.2 million barrels for the week ending on March 28, 2025. Additionally, the OPEC+ group agreed over a 411,000 barrels per day (bpd) increase in its collective output for May 2025 during its policy review meet. The group was earlier anticipated to raise its output by 140,000 bpd, so this near threefold hike pushed prices even lower on oversupply fears.
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COMTEX_464541448/2227/2025-04-14T09:37:27
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