Oil prices held steady on Monday as investor caution intensified over the potential impact of U.S. trade policies and rising output from OPEC+ producers on global economic growth and fuel demand.
The persistent uncertainty has dampened appetite for riskier assets, preventing a meaningful recovery in oil markets.
Brent crude was down by 11 cents to $70.25 a barrel by 09:56 am Nigerian time while U.S. West Texas Intermediate (WTI) crude slipped by 17 cents to $66.87 per barrel.
Last week was the seventh consecutive weekly loss for WTI, the longest losing streak since November 2023, while Brent crude recorded its third straight weekly decline.
Analysts attribute the continued weakness in oil prices to a complex web of factors, including U.S. President Donald Trump’s protectionist trade policies.
The administration’s imposition and subsequent delay of tariffs on key oil suppliers such as Canada and Mexico, coupled with elevated duties on Chinese goods, have unsettled markets worldwide.
In retaliation, China and Canada have implemented their own tariffs, further complicating the global trade landscape.
“Tariff uncertainty is a key driver behind the weakness in oil prices,” noted ING analysts in a report. They added that price cuts by Saudi Arabia and deflationary signals from China have also weighed heavily on market sentiment.
On the supply side, growing output from OPEC+ producers continues to exert additional downward pressure on prices. Russia’s Deputy Prime Minister Alexander Novak indicated that the alliance might reconsider its production strategy if market imbalances worsen, though no immediate action is expected.
The potential easing of U.S. sanctions against Russia’s energy sector has introduced further uncertainty. According to sources familiar with the matter, Washington is exploring ways to alleviate these sanctions if Russia agrees to a ceasefire in Ukraine. President Trump has also signaled intentions to intensify sanctions against Russia should a peace deal remain elusive.
“Concerns about U.S. growth, potential sanction relief for Russia, and rising OPEC+ output are collectively putting a cap on any sustained oil price rally,” said Tony Sycamore, an analyst at IG.
Also, the U.S. administration’s efforts to curb Iranian oil exports as part of a broader strategy to contain Iran’s nuclear program have not had the anticipated bullish impact on prices.
Iran’s Supreme Leader Ayatollah Ali Khamenei asserted over the weekend that the nation would not be coerced into negotiations, suggesting that geopolitical tensions in the Middle East are likely to persist.
Looking ahead, investors are poised to scrutinize the upcoming monthly reports from the International Energy Agency (IEA) and OPEC for updated supply and demand forecasts. These reports are expected to offer critical insights into the potential direction of the oil market in the coming months.
Until greater clarity emerges on trade policies and OPEC+ production strategies, investor caution is expected to keep oil prices in check, limiting the potential for a sustained rally.
