Oil News: Crude Slips as OPEC’s Production Hike and U.S. Tariffs Weigh on Demand

Oil Prices Drop as OPEC+ Output Hike and Trade Tariffs Pressure Market

Crude oil prices extended losses Tuesday as OPEC+ confirmed a 138,000 bpd production increase in April, its first since 2022. The decision, combined with fresh U.S. tariffs on Canada, Mexico, and China, intensified bearish sentiment. Market fears of potential U.S. sanctions relief on Russian oil further pressured prices.

At 12:49 GMT, Light Crude Oil Futures are trading $67.18, down $1.19 or -1.74%.

OPEC+ Supply Boost Catches Traders Off Guard

OPEC+’s decision surprised the market, as many expected the group to maintain its current cuts. Analysts suggest the move may be politically driven, particularly as former President Donald Trump has pushed for lower oil prices.

“The shift in OPEC’s strategy appears to prioritize politics over price,” noted Bjarne Schieldrop, chief commodities analyst at SEB. With additional barrels coming to market, traders are now reassessing supply expectations.

Tariffs Raise Demand Concerns

New 25% U.S. tariffs on imports from Canada and Mexico, along with a doubling of duties on Chinese goods to 20%, took effect Tuesday. China quickly retaliated with 10%-15% hikes on U.S. agricultural products and restrictions on 25 American firms.

Goldman Sachs warned that while tariffs may not directly hit crude prices, they could weaken economic activity and slow energy demand. The market is now factoring in reduced consumption, particularly in trade-dependent industries.

Russian Sanctions Relief Fears Add to Bearish Pressure

Reports that the White House may ease sanctions on Russian oil exports added to selling pressure. The news follows Trump’s decision to pause U.S. military aid to Ukraine, fueling speculation that Washington could be moving toward de-escalation with Moscow.

Tony Sycamore, analyst at IG, called it a “perfect storm” for crude, citing increased supply, trade disputes, and potential Russian barrels returning to market as key downside risks.

Bearish Forecasts from Goldman and Citi

Goldman Sachs now sees downside risks to its 2025 and 2026 Brent price forecasts, which previously stood at $78 and $73 per barrel. The bank warns an extended OPEC+ supply increase could push Brent into the low-to-mid $60s by late 2026.

Citi Research also sees Brent grinding lower to $60-$65 per barrel in the next 6-12 months due to rising supply and weaker demand.

Market Outlook: Further Downside Ahead

Crude prices face strong bearish pressure, with higher OPEC+ output, trade war risks, and weaker demand weighing on sentiment. Without a shift in supply discipline or a demand rebound, oil remains vulnerable to further losses. Traders should watch for technical support levels and potential OPEC+ adjustments in the coming weeks.

Technically speaking, the market is weak, trading on the bearish side of the 200-day moving average at $70.56 and the 50-day moving average at $72.00 as well as a key retracement zone at $70.35 to $72.08.

Current downside momentum indicates Light Crude Oil Futures could probe former bottoms at $67.06, $65.20 and $64.75 over the near-term.

More Information in our Economic Calendar.