NEW YORK: Oil prices fell about 2% to a two-week low on Tuesday on expectations OPEC+ will boost output even as U.S. President Donald Trump’s on-again off-again trade tariffs could reduce global economic growth and demand for the fuel.
Brent crude futures fell by $1.41, or 2.1%, to $64.45 per barrel by 11:03 a.m. EDT (1503 GMT), while U.S. West Texas Intermediate crude dropped by $1.36, or 2.2%, to $60.69.
That puts both benchmarks on track for their lowest closes since April 10.
Trump’s push to reshape world trade by imposing tariffs on imports into the U.S. has made it probable that the global economy will slip into recession this year, according to a majority of economists in a Reuters poll.
China, hit with the steepest tariffs, has responded with its own levies against U.S. imports, stoking a trade war between the top two oil-consuming nations. That has prompted analysts to sharply lower their oil demand and price forecasts.
“Stalling negotiations between China and the U.S. on trade raises anxiety levels on economic and demand growth prospects once again. It is not even clear whether the two leaders have spoken to one another,” said Tamas Varga, an analyst at PVM, a brokerage and consulting firm that is part of TP ICAP.
The U.S. trade deficit in goods widened to a record high in March as businesses ramped up efforts to bring in merchandise ahead of Trump’s sweeping tariffs, suggesting trade was a large drag on economic growth in the first quarter.
Oil prices stable amid economic uncertainty, OPEC+ supply fears
General Motors, Kraft Heinz and Electrolux on Tuesday joined the diverse list of companies that have pulled forecasts for 2025 or slashed outlooks, as Trump’s trade war sends a chill through the corporate world.
The White House said Trump will sign an executive order on Tuesday to soften the impact of his automotive tariffs.
UK oil major BP, meanwhile, reported a deeper-than-expected 48% drop in net profit to $1.4 billion on weaker refining and gas trading.
The energy market is awaiting earnings from U.S. oil majors Exxon Mobil and Chevron later this week.
Production rising
Several members of OPEC+, which comprises the Organization of the Petroleum Exporting Countries and its allies, will suggest an acceleration of output hikes for a second consecutive month in June, sources told Reuters last week.
“Another production hike from OPEC+ could not happen at a worse time when sentiment is already weak, and with Kazakhstan not showing much interest in reducing production,” said Saxo Bank analyst Ole Hansen.
OPEC+ member Kazakhstan increased oil exports by 7% year-on-year in January-March thanks to a supply boost via the Caspian pipeline, Reuters calculations based on official data and sources showed on Tuesday.
US oil inventories
U.S. oil inventory data from the American Petroleum Institute trade group is due on Tuesday and from the U.S. EIA on Wednesday.
Analysts forecast energy firms added about 0.5 million barrels of oil to U.S. stockpiles during the week ended April 25.
If correct, that would be the fifth weekly build in a row and compares with an increase of 7.3 million barrels during the same week last year and an average build of 3.2 million barrels over the past five years (2020-2024).
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