KEY POINTS
- Oil prices drop as U.S. tariffs are expected soon.
- Market jitters grow ahead of President Trump’s announcement.
- Stricter sanctions could hurt global oil supply and demand.
Oil prices declined on Tuesday as traders prepared for tariffs that President Donald Trump plans to announce on Wednesday.
These tariffs could worsen the ongoing global trade tensions. Oil futures saw a slight dip, Brent crude settled 28 cents lower, or 0.37%, at $74.49 per barrel. U.S. West Texas Intermediate crude oil also dropped 28 cents, or 0.39%, ending the session at $71.20.
Tariff threat to global oil supply and demand
The White House did not reveal details about the tariffs, leaving the market uncertain about their scope. Bob Yawger, director of energy futures at Mizuho, stated, “The market is getting a little jittery with less than 24 hours to go.” He added that while U.S. tariffs could affect the oil supply, there is also a chance that global demand could decline, outweighing the potential loss in supply.
According to Reuters, Trump’s tariff threats have raised concerns about disruptions in the oil supply. On Sunday, he warned that the U.S. would impose secondary tariffs of 25% to 50% on Russian oil buyers if Moscow continued to block efforts to end the war in Ukraine. This action could disturb global oil flows, especially for China and India, major buyers of Russian oil. Trump also threatened similar tariffs on Iranian oil.
In addition to these tariff concerns, oil prices received some support from supply disruptions. Russia ordered Kazakhstan to close two of its main oil export terminal moorings. Kazakhstan will be required to cut oil output, further tightening global supply.
OPEC+ production adjustments in focus
Traders are also keeping an eye on OPEC+’s upcoming meeting on April 5. The group is expected to approve a production hike of 135,000 barrels per day in May to address supply concerns. Meanwhile, U.S. crude inventories are expected to have decreased by about 2.1 million barrels for the week ending March 28.
The looming tariffs on oil imports from Russia and Iran have fueled supply fears. On Sunday, Trump stated that the U.S. would impose secondary tariffs of up to 50% on Russian oil if Moscow attempted to hinder efforts to end the war in Ukraine.
This measure could disrupt the global oil supply, particularly hurting key Russian customers like China and India. Additionally, Trump has threatened to place similar tariffs on Iranian oil. These developments add further uncertainty to the global oil market.
