Oil prices experienced significant volatility during the last week of April 2025. These fluctuations were influenced by multiple factors, most notably OPEC+ plans to increase production, ongoing concerns about the US-China trade war, and geopolitical tensions in Ukraine.
Slight Price Rise Amid Growing Pressure
In Friday’s session, Brent crude futures rose 0.3% to $66.77 per barrel. West Texas Intermediate crude futures also rose 0.4% to $62.38 per barrel. Despite this slight rise, prices are on track for weekly losses of nearly 2%, following a decline of more than 10% in April.
OPEC+ Plans to Increase Production and Their Impact on the Market
Reports indicate that several OPEC+ countries are seeking to accelerate oil production increases in June, extending the surprise increase in May. This move comes as oil prices hover near four-year lows amid a trade war between the United States and China and concerns about oversupply.
Increased production could lead to increased supply at a time of weak demand, putting pressure on prices. However, some OPEC+ members are facing internal disagreements over adherence to quotas, further complicating the situation.
US-China Trade Tensions
The trade war between the United States and China continues to cast a shadow over markets. Earlier this week, the Wall Street Journal reported that the Trump administration is considering reducing tariffs on Chinese imports to ease trade tensions. Trump hinted that a potential agreement could result in a “significant” reduction in tariffs, but added that such a reduction “would not be zero.”
For its part, China has announced that it is not currently in trade negotiations with Washington, increasing market uncertainty. However, informed sources reported that the Chinese government is considering suspending its 125% tariffs on some US imports, given the economic costs of the trade war.
Geopolitical tensions in Ukraine and their impact on oil prices
Oil prices were supported by escalating geopolitical tensions following Russia’s deadliest missile and drone attack on Kyiv in nearly a year. In response, US President Donald Trump issued a direct rebuke to Russian President Vladimir Putin, urging him to “stop” the aggression and warning that the strikes jeopardize ongoing peace negotiations.
These developments have raised concerns that the conflict could further disrupt energy markets, especially given Russia’s role as one of the world’s largest crude oil producers.
Oil Market Outlook
With the factors affecting oil prices continuing, the future remains uncertain. Increased production by OPEC+ could lead to a supply surplus, while geopolitical tensions could push prices higher. Furthermore, any developments in the US-China trade war would have a significant impact on markets.
Under these circumstances, investors should closely monitor developments and make informed investment decisions. Oil-producing countries should also coordinate to ensure market stability and avoid sharp price volatility. West Texas Intermediate Crude Oil Continues to Rise but Is Headed for Weekly Losses Amid Supply Tensions
West Texas Intermediate crude oil rose in Asian trading on Friday to around $63 a barrel. Despite this rise, the crude is still headed for a weekly loss of nearly 2%. This is due to growing concerns about a supply glut, especially in light of OPEC+ plans to increase production in June.
Markets are in a state of anticipation. Several OPEC+ member countries are seeking to accelerate production for the second consecutive month. Kazakhstan, a key member of the alliance, announced that it will prioritize national considerations in production decisions, refusing to reduce supplies from the country’s major oil fields.
Amid these developments, analysts expect supply levels to rise at a pace that exceeds global demand, especially with the ongoing economic challenges in China and Europe.
Geopolitical Developments Affecting Market Sentiment
Meanwhile, the market is being affected by the repercussions of the war in Ukraine. Tensions have recently escalated as Russia intensifies its attacks on Kyiv. The United States has called for an immediate ceasefire, warning that a continuation of the conflict could derail peace negotiations. If the two sides reach a truce and ease sanctions, Russia could increase its oil exports, worsening the imbalance between supply and demand.
On the other hand, the Iranian Foreign Minister expressed his willingness to meet with European leaders to discuss the nuclear issue. If an agreement is reached, sanctions on Iranian oil could be lifted. This scenario would add additional crude oil to global markets, especially since Iran has production capacity ready for immediate re-export.
The Impact of Monetary Policy and the US Dollar
In a related context, the strengthening of the US dollar is an additional pressure factor on oil prices. Tighter monetary policy in the United States has increased the value of the dollar, making oil priced in it more expensive for foreign buyers. This, in turn, weakens global demand, especially in emerging economies. On the other hand, some analysts have indicated that the Federal Reserve may soon ease its hawkish stance, which could provide a fresh boost to commodities, particularly crude oil.
Weak Global Demand Exacerbates Market Volatility
On the other hand, the outlook for global demand is negatively impacted by trade tensions between the United States and China, the world’s largest oil consumers. The trade dispute continues to disrupt global supply chains, leading to higher manufacturing costs and lower corporate financial prospects.
These developments have raised concerns about a broader global economic slowdown. If global growth slows, demand for oil could decline, especially given that energy demand is highly dependent on the pace of industrial growth.
Market Outlook: Warnings and Recommendations
In light of these changes, major financial institutions are advising governments to adjust their fiscal policies. The Lagos Chamber of Commerce and Industry (LCCI) called on the federal government to review the 2025 budget, noting that the decline in oil prices below the budget target could threaten financial stability.
The London Chamber of Commerce (LCCI) stressed that the country remains vulnerable to external shocks due to its over-reliance on oil as a source of foreign exchange. Although the Nigerian government has launched a number of reforms, such as the unification of the exchange rate, these measures have not adequately addressed the structural imbalance.
Oil Prices and the Future of National Budgets
Many oil-exporting countries are closely monitoring price trends. The LCCI called on the Nigerian government to review the 2025 budget, given the decline in oil prices below the reference price adopted in the federal budget. The chamber warned that this decline could hinder the implementation of government programs and affect financial stability.
Will Prices Stabilize?
Analysts expect oil prices to remain under pressure during the second quarter of 2025, as concerns about oversupply persist. Some experts believe the market needs strong signals of improved global demand or clear decisions by OPEC+ to cut production to halt the price slide.
On the other hand, prices may see temporary support from any new geopolitical escalation, positive developments in the US-China trade negotiations, or accommodative monetary measures from major central banks. However, until these scenarios materialize, volatility will remain a major feature of energy markets.
Current Scenario Summary
Oil markets are experiencing a critical moment. Between increasing supply pressures, geopolitical volatility, and global monetary changes, determining the future direction remains dependent on several complex factors. West Texas Intermediate crude oil (WTI) is showing limited resilience but remains under broad pressure.
