Oil prices experienced minimal fluctuations on Wednesday as traders adopted a more cautious stance ahead of U.S. President Donald Trump’s announcement regarding increased trade tariffs later in the day.
Investors were also looking forward to a meeting of the Organization of Petroleum Exporting Countries and its allies later this week, where the cartel is reportedly contemplating plans to further boost production.
Crude prices observed some increases over the past week after Trump issued threats of additional oil sanctions against Russia, while simultaneously warning of military action against Iran concerning a nuclear agreement.
Increased risk premiums in oil trading
Traders began to attach a higher risk premium to oil, betting that supplies could be interrupted due to Trump’s actions. However, substantial gains in crude were stifled by worries that Trump’s policies might disrupt global growth, subsequently undermining the demand for crude.
Brent oil futures expiring in June dipped 0.1 percent to $74.43 a barrel, while West Texas Intermediate crude futures stabilized at $70.72 a barrel by 21:55 ET (01:55 GMT).
Mixed signals from inventory data
Oil markets received mixed signals from the inventory data released by the American Petroleum Institute, which indicated a significant build of 6 million barrels in overall stockpiles. However, gasoline inventories appeared to have decreased. The API data often heralds a similar trend in the official inventory data, which is expected later on Wednesday.
Trump’s impending tariff measures
Trump is poised to impose reciprocal tariffs against several major U.S. trading partners later in the day. Reports indicated that he was also considering a 20 percent tariff on all imports to the U.S. Treasury Secretary Scott Bessent stated that Trump would implement the maximum amount of tariffs on Wednesday, while targeted countries could lower the tariffs by enacting measures to appease Washington.
Uncertainty surrounding tariff impacts
Yet, the extent of these tariffs remained uncertain, leaving investors anxious about their potential economic consequences. Numerous analysts and policymakers have cautioned that the tariffs could fuel U.S. inflation and hinder economic growth—a scenario that would adversely affect oil demand. Tariffs imposed on Canada and Mexico could also significantly restrict U.S. oil supplies.
OPEC+ meeting and production plans
OPEC+ is scheduled to meet on Thursday, with a Reuters report suggesting that some members of the cartel will likely raise production further. This production increase comes amid Trump’s calls for OPEC to assist in lowering oil prices. Thursday’s meeting will also address plans for certain OPEC+ members to implement additional supply cuts to compensate for previous overproduction.
