Oil prices continued their downward trend on Tuesday, influenced by a combination of geopolitical and economic factors. Brent crude futures fell by 1.6% to settle at $71.62 per barrel, while U.S. West Texas Intermediate (WTI) crude decreased by 2.0% to $68.37.
One significant factor contributing to this decline is the Trump administration’s decision to pause all military aid to Ukraine. This move follows a contentious meeting between President Donald Trump and Ukrainian President Volodymyr Zelensky, adding to existing market uncertainty surrounding international relations.
Adding to the downward pressure, OPEC+ confirmed plans to increase oil production by 138,000 barrels per day starting in April, marking the first such increase since 2022. This decision has raised concerns about a potential oversupply in the market, especially when coupled with worries about the impact of new U.S. tariffs on Canada, Mexico, and China. These tariffs have fuelled apprehensions regarding global economic growth and, consequently, future oil demand.
Analysts note that market participants are grappling with the various energy-related policy announcements from the Trump administration. The negative impacts of U.S. tariff measures currently appear to outweigh any potential positives, contributing to the recent decline in oil prices. On Monday, oil prices had already fallen about 2% to a 12-week low in response to these combined pressures.
In summary, the convergence of geopolitical tensions, increased oil supply from OPEC+, and trade policy uncertainties has created a challenging environment for the oil market, leading to the observed decrease in prices.
