In the early Asian trading session on Wednesday, the price of West Texas Intermediate (WTI) crude oil, a crucial benchmark for the global oil market, edged higher to approximately $70.95. However, this upward movement was met with resistance, keeping the price capped below the $71.00 mark. The market’s behavior was influenced by a complex web of factors, with the looming threat of Trump’s tariffs being a major concern for investors.
Geopolitical Tensions and Tariff Threats
US President Donald Trump’s recent statements have added significant volatility to the oil market. He expressed his frustration with Russian President Vladimir Putin, threatening to impose secondary tariffs ranging from 25% to 50% on buyers of Russian oil if he perceives that Moscow is obstructing efforts to end the war in Ukraine. Over the weekend, Trump also issued threats to Iran, warning of bombing and secondary tariffs if Tehran fails to reach an agreement with Washington regarding its nuclear program. These geopolitical tensions have the potential to disrupt the global oil supply, which could drive up the WTI price.
On the other hand, Trump’s planned “reciprocal tariffs,” set to be announced on Wednesday, cast a shadow over the oil market’s upward potential. These tariffs could lead to new trade barriers for many countries with existing duties on US goods. While the White House has not provided details about the scale and scope of these tariffs, the uncertainty has made traders cautious. A potential slowdown in global trade due to the tariffs could dampen oil demand, putting downward pressure on the WTI price.
Inventory Data Adds to the Pressure
The American Petroleum Institute (API) released its weekly report, which showed that crude oil stockpiles in the United States for the week ending March 28 increased by 6.037 million barrels. This was a significant reversal from the previous week, when inventories decreased by 4.6 million barrels. Year – to – date, crude oil inventories have climbed by nearly 23 million barrels, according to calculations based on API data. Rising inventories indicate an oversupply situation, which typically weighs on oil prices.
Upcoming OPEC+ Meeting in Focus
Oil traders are closely monitoring the upcoming OPEC+ ministerial committee meeting scheduled for Saturday. Reuters sources suggest that OPEC+ plans to increase output by 135,000 barrels per day in May, following a similar increase in April. These production decisions by OPEC+ can have a substantial impact on the global oil supply and, consequently, the WTI price. An increase in production could further exacerbate the supply glut, while a production cut could help tighten the market and support prices.
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