Oil Prices Decline Amid Trade War Concerns, But Maintain Weekly Gains
Oil prices slipped on Friday, March 28, 2025, as concerns over US tariff wars and a potential global recession weighed on market sentiment. However, prices still managed to record a third consecutive week of gains, driven by Washington’s increased pressure on OPEC members Venezuela and Iran.
Market Performance
- Brent crude futures dropped $0.40 (0.5%), settling at $73.63 per barrel.
- US West Texas Intermediate (WTI) crude fell $0.56 (0.8%), closing at $69.36 per barrel.
Despite the daily dip, Brent futures rose 1.9% on a weekly basis, while WTI gained 1.6%. Since hitting multi-month lows in early March, Brent has climbed over 7%, and WTI has rebounded by more than 6%.
US Tariffs and Recession Fears
US President Donald Trump announced reciprocal tariffs on a broad range of imports, set to take effect on April 2. Analysts at JPMorgan cautioned that a trade war escalation could trigger a global recession, further affecting market confidence.
“Concerns about a trade war, coupled with elevated US policy uncertainty, are weighing heavily on sentiment,” JPMorgan analysts noted. However, high-frequency oil demand indicators remain stable for now.
US Crude Inventory Decline
Mid-week data from the Energy Information Administration (EIA) reported a 3.3 million-barrel decline in US crude inventories, bringing total stockpiles to 433.6 million barrels. This drawdown far exceeded analysts’ expectations of a 956,000-barrel decline, offering some bullish support to the market.
Sanctions on Venezuela and Iran
A key driver of this week’s oil price gains was the Trump administration’s increased pressure on the Maduro regime in Venezuela.
- On Monday, March 24, Trump announced new 25% tariffs targeting buyers of Venezuelan crude.
- This follows US sanctions on China’s imports from Iran, as part of Trump’s efforts to drive Iranian oil exports to zero.
Barclays analyst Amarpreet Singh noted that these measures could further exacerbate an expected 200,000 barrels per day decline in Venezuelan crude oil output this year. The sanctions have already led to trade disruptions, with India’s Reliance Industries—operator of the world’s largest refining complex—suspending Venezuelan oil imports.
OPEC+ Production Strategy & Market Outlook
The OPEC+ alliance, which includes OPEC members and Russia, is set to begin its monthly oil production increases in April. According to Reuters, the group is likely to continue raising output in May.
Market analysts predict that the second quarter of 2025 will be tighter than initially expected, given potential reductions in Venezuelan and Iranian crude supplies.
StoneX analyst Alex Hodes stated, “If there are reductions in Venezuelan or Iranian crude oil barrels on the market, this would certainly be a bullish development.”
With geopolitical tensions and economic uncertainty shaping oil markets, investors will closely monitor future US policies and OPEC+ production decisions to gauge the direction of oil prices in the coming weeks.
