Oil prices were mostly stable on Wednesday as tensions surrounding U.S.-China tariffs prompted traders to exercise caution. Concurrently, President Donald Trump’s call for stricter enforcement on Iran offered some backing to the markets.
At 20:26 ET (01:26 GMT), Brent oil futures dipped 0.1 percent to $76.13 a barrel, while crude oil WTI futures for March delivery rose by 0.1 percent, reaching $72.44 a barrel.
Oil fluctuated within narrow ranges, reflecting a cautious atmosphere as markets considered conflicting narratives regarding demand and supply.
Traders balance U.S.-China trade tensions against tighter sanctions on Iranian oil
Prices encountered challenges after China retaliated against U.S. tariffs with duties on American imports, including liquefied natural gas, coal, crude oil, and agricultural equipment. These developments have injected a level of uncertainty into the market, as traders evaluate the potential effects on global oil demand. Reports surfaced indicating that Trump was not in a hurry to engage in discussions with his Chinese counterpart Xi Jinping, heightening concerns about the possibility of reaching a deal before the deadline on February 10. In contrast, support emerged when Trump signed a directive reestablishing “maximum economic pressure” on Iran, which includes stricter enforcement of oil export sanctions aimed at reducing Tehran’s shipments “to zero.” This action is expected to create a supply gap in the market, which could potentially lead to upward pressure on oil prices.
US crude oil inventories jump above expectations- API
The American Petroleum Institute (API) released its most recent weekly crude oil inventory report on Tuesday, revealing a build of 5.025 million barrels for the week ending January 31. This increase surpassed market predictions, which had estimated stockpiles at 3.170 million barrels, and notably exceeded the previous week’s build of 2.860 million barrels. The consistent rise in crude oil inventories over the past three weeks points to a potential softening in demand or an oversupply in the market. Moreover, the Organization of the Petroleum Exporting Countries and allies, or OPEC+, is expected to stick to its current plans to gradually increase output starting in April, further highlighting an oversupply scenario. Markets will be closely watching the U.S. Energy Information Administration’s (EIA) weekly report due later in the day to confirm these trends.
Oil prices fell on Tuesday, pulling back from the previous day’s increase, following U.S. President Donald Trump’s announcement of a one-month postponement on newly imposed tariffs for imports from Canada and Mexico. This move eased immediate worries regarding potential supply disruptions from two of the U.S.’s main oil sources. As of 20:21 ET (01:21 GMT), Brent Oil Futures dropped 0.7 percent to $75.47 a barrel, while crude oil WTI futures for March fell 1 percent to $71.70 a barrel.
OPEC+ still intends to increase production starting in April
Despite the tariff developments, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) continue to uphold their current oil production strategy, rebuffing Trump’s calls to reduce prices. This decision highlights the group’s dedication to a gradual tapering of production cuts, set to commence on April 1, depending on low inventories and increasing global demand. The OPEC+ coalition has been reducing output by 5.85 million barrels per day, roughly 5.7 percent of global supply, as part of a series of agreements initiated in 2022. In December, OPEC+ extended its latest round of cuts through the first quarter of 2025, delaying the planned output increase until April due to weak demand and rising supply from outside the group.
