Oil prices fell on Monday, heading for a modest quarterly loss, despite US President Donald Trump’s warning that he could impose tariffs on buyers of Russian oil if Washington felt Moscow was obstructing its efforts to end the war in Ukraine.
Brent crude futures for June delivery, the most widely traded, fell 30 cents, or 0.4%, to $72.46 a barrel by 03:30 GMT, while US West Texas Intermediate (WTI) crude fell 33 cents, or 0.5%, to $69.03 a barrel. Later in the day, the nearest-dated Brent contract closed at $73.36, down 26 cents, or 0.4%.
Oil prices fell slightly this month, marking the first quarterly decline for oil in two quarters. Despite negative expectations, President Trump criticized Russian President Vladimir Putin, stating that he might impose tariffs of 25% to 50% on buyers of Russian oil if Moscow obstructs Washington’s efforts to end the war in Ukraine. Trump suggested that these measures could be implemented within a month.
Market Analysis: Trump’s Threats and Their Impact on Prices
There are two ways to understand the decline in prices. First, some believe that the market does not believe Trump’s threats and that they are merely political statements. Tony Sycamore, a market analyst at IG, said that the markets are not taking these threats seriously. The second view is that Trump’s threats could lead to an escalation in the trade war, harming global growth and negatively impacting demand for crude oil.
In addition, Trump threatened to bomb Iran and impose tariffs on Iranian oil if Tehran does not reach an agreement with Washington regarding its nuclear program. These statements reflect significant tensions in global energy markets.
OPEC+ and the Future of Oil Production
Later, the OPEC+ group, which includes OPEC members and Russia’s allies, will start implementing a plan to increase oil production each month beginning in April. The group is likely to continue increasing production in May, according to a Reuters report published last week.
Yuki Takashima, an economist at Nomura Securities, said the market expects West Texas Intermediate (WTI) crude to remain in the $65-$75 range for now. This forecast is based on the market’s assessment of Trump’s threats, which could impact oil supplies, along with the worrisome global economic situation.
Saudi Arabia, the world’s largest oil exporter, will likely reduce its crude prices for Asian buyers in May after benchmark crude prices declined sharply this month.
Regarding Kurdish oil exports via the Iraq-Turkey pipeline, talks to resume them have faced a significant obstacle due to continued uncertainty over payments and contracts, which has negatively impacted supplies from that region. Economic Forecast for 2025: Continued Pressure on Oil Prices
A March 2025 poll showed that oil prices will remain under pressure next year due to several economic and political factors. Oil demand was expected to remain weak due to US tariffs and the economic slowdown in India and China. OPEC+ continues with its plans to increase production despite these pressures.
The poll of 49 economists also indicated that the average price of Brent crude in 2025 will reach $72.94 per barrel, down from the February estimate of $74.63. For US crude, the average price is expected to decline to $69.16 per barrel, compared to $70.66 last month.
Demand and Production Challenges
This decline points to weak economic prospects in China, as well as weak demand performance in India, which partially offsets the slight improvement in European demand. Florian Grunberger, an analyst at Kpler, added that the market could experience a slight oversupply this year, leading to further price pressure.
The Organization of the Petroleum Exporting Countries (OPEC) forecasts that global oil demand will rise by 1.45 million barrels per day in 2025 and then by 1.43 million barrels per day in 2026. However, analysts noted that tariffs that Trump may impose on some countries could disrupt these forecasts, potentially slowing economic growth and increasing inflation.
Return to Russian Oil and the Impact of Sanctions
Since returning to office in January 2025, Trump has reimposed his “maximum pressure” campaign on Iran to reduce its oil exports and announced a 25% tariff on any country that buys oil or gas from Venezuela. In this context, analysts believe that the lifting of US sanctions on Russia could significantly alter market dynamics, as the return of Russian oil to the market will lead to a price adjustment.
OPEC+ and Production Policy
According to forecasts from four sources familiar with the matter, Reuters reports that the group will proceed with its plan to increase oil production for the second consecutive month in May. However, many analysts believe that OPEC+ will attempt to be flexible regarding these increases, especially in light of the challenges facing global demand. John Pizey, president of Stratas Advisors, said that OPEC+ will not significantly increase supply this year. Rather, it is expected to push oil prices higher by allowing demand to exceed supply during the last three quarters of the year.
