West Texas Intermediate (WTI) crude oil prices are holding steady around $69.90 per barrel on Friday, following a modest decline in the Asian trading session after posting gains the day before. The price remains on track for its first monthly decline since November, primarily driven by concerns over global economic growth and fuel demand, amid U.S. tariff threats and signs of a potential slowdown in the American economy, which have overshadowed worries about supply disruptions.
Economic Growth and Tariff Concerns Weigh on Market Sentiment
U.S. President Donald Trump’s announcement on Thursday regarding the imposition of 25% tariffs on Mexican and Canadian goods, alongside a 10% levy on Canadian energy imports, heightened concerns over the global economic outlook. These tariffs are scheduled to take effect on March 4, and alongside existing threats of duties on Chinese imports, the market is growing increasingly cautious.
Further fueling investor anxiety, the U.S. Gross Domestic Product (GDP) growth for Q4 slowed to 2.3%, down from 3.1% in the previous quarter. Although the figure matched expectations, it highlighted a deceleration in economic activity. Meanwhile, U.S. jobless claims rose by 22,000 to 242,000, marking the highest level in over two months and pointing to potential softening in the labor market. Investors are now awaiting the release of Friday’s Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred measure of inflation, which could provide further clues on economic health and future monetary policy.
Chevron’s Venezuela Operations Spark Supply Concerns
Despite the overall bearish sentiment, oil prices saw a brief surge of over 2% on Thursday following news that President Trump had revoked a license that allowed U.S. oil giant Chevron to operate in Venezuela. The move could disrupt over a quarter of the country’s oil output, as Chevron exports approximately 240,000 barrels per day from Venezuela. This decision has raised the possibility of a new agreement between Chevron and Venezuela’s state-run oil company, PDVSA, to redirect crude exports to other markets outside the U.S.
OPEC+ Production Decision Looms
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) are also in focus as they deliberate their production strategy for April. The group is facing uncertainty due to the imposition of new U.S. sanctions on Venezuela, Iran, and Russia. While OPEC+ typically finalizes its output decisions a month in advance, there is no consensus on whether to proceed with the planned increase in oil production for April or to maintain current output levels. The group has until March 5-7 to confirm its production strategy, with the outcome still hanging in the balance, according to sources close to the matter.
Outlook
Overall, WTI crude oil remains under pressure as traders weigh concerns about global economic growth, particularly in the wake of tariff threats and weak economic data from the U.S. However, supply-side factors, including geopolitical developments and OPEC+ decisions, continue to provide some support to the market. The direction of oil prices will likely remain influenced by both macroeconomic data and geopolitical events in the coming weeks.
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